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Import Policy Effects on the Optimal Oil Price

Steven M. Suranovic

Year: 1994
Volume: Volume15
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-7
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Abstract:
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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