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December 02-03, 2019 | Dubai, UAE
Oil & Gas
2
nd
International Conference and Expo on
Journal of Industrial and Environmental Chemistry | Volume 3
Trusting markets: Energy security and strategic storage from a financial option
perspective
Lawrence Haar
Oxford Brookes University, UK
T
here are many approaches to measuring energy security:
Some researchers use geologic and technical factors while
others focus upon consumption and import dependence.
Common to these approaches is the emphasis upon exposure
to petroleum supply disruptions and the scope for mitigation
but not to the probability of its occurrence. As petroleum
markets have shown themselves resilient to quite extreme
secular events, we ask if an alternative approach might be
usefulinquantifyingenergysecurity.Weapplyfinancialoption
theory to three eventful periods to learn the expectations
of market participants to disruptions. We find the forward-
looking views of petroleum participants to be accurate with
regard to both price persistence and the ability of markets
to absorb shocks, lending support to the proposition that
markets can be trusted to deliver both secure and affordable
supplies of petroleum. In light of themajor structural changes
to petroleum markets in the last half-century, our results
cast doubt upon the need for emergency inventories unless
justified to dampen market volatility on public good grounds.
e
:
ihaar@brookes.ac.ukJ Ind Environ Chem, Volume:3
DOI: 10.35841/2591-7331-C3-015