Energy security and strategic storage from a financial option perspective

Haar, Lawrence and Haar, Laura N. (2018) Energy security and strategic storage from a financial option perspective. In: 41st IAEE International Conference, 10 - 13 June 2018, Groningen.

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Item Type:Conference or Workshop contribution (Other)
Item Status:Live Archive


After reviewing the alternative approaches to measuring energy security the authors introduce a fresh perspective using financial option theory to reveal the forward looking price expectations of markets. Rather than focusing upon exposure to supply interruption or upon any scopes for mitigation, premised upon efficient market theory, the authors examine the probability of such events. Notwithstanding wide-spread concerns over supply vulnerabilty, the authors show that the implicit forecasts of market participants embodied within option prices, provide useful forecasts of future prices and underscore the resilience of international petroleum markets. Apart from using strategic storage to dampen natural market volatility, the results raise doubts over the need for maintaining such inventories.

Keywords:Strategic Petroleum Reserves, Financial Option Theory, Oil Markets, Supply disruptions
Subjects:L Social studies > L113 Economic Policy
L Social studies > L111 Financial Economics
L Social studies > L110 Applied Economics
Divisions:Lincoln International Business School
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ID Code:31245
Deposited On:05 Mar 2018 21:56

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