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Import Policy Effects on the Optimal Oil Price

A steady increase in oil imports leaves oil importing countries increasingly vulnerable to future oil price shocks. Using a variation of the U.S. EIA's oil market simulation model, equilibria displaying multiple price shocks is derived endogenously as a result of optimizing behavior on the part of OPEC Here we investigate the effects that an oil import tariff and a petroleum stock release policy may have on an OPEC optimal price path. It is shown that while both policies can reduce the magnitude of future price shocks neither may be politically or technically feasible.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Oil imports, US, Energy policy, Oil prices, OMS92 model,

DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-7

Published in Volume15, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.