Optimal Size Of China's Strategic Petroleum Reserve

With the rapid pace of industrialization and urbanization, China has become one of the country whose import of oil increase the most fast all over the world. But what is very depressive is that China still have no strategy for energy security and oil security, which is in a great demand for a economy depends more on oil import. As for SPR , which is one of the most effective and popular strategy for industrialized country to prevent for oil disruption, China has begun with building SPR, but is still a fresh man in operation and theoretic research.In this paper, a quantitative model was built to analysis the optimal SPR for China.In the introduction, a summary of the research background and the structure of the whole article is presented.In the first chapter, literature review of spr size study in a global insight is stated.In the second chapter, a more detail description about the concept of SPR and various institution and operation system in industrialized countries is enclosed. What is most important is the thesis that the energy security of China is full of challenge, and a strengthened investment should be done to the SPR in China, for the market failure to provide enough reserve.For the third chapter, which is the most important part of the whole essay, a model has been built to analysis the optimal SPR, as which is a very good solution for uncertainty in the shock and disruption of oil supply and price. The core problem of the model is a trade-off between the security cost and operation and maintenance cost, which is changed by the scale of SPR. After the model was built, a empirical calculation was done for Chinese economy under a high price pressure.At the last chapter, a policy suggestion was presented for the operation of SPR, aiming at reduce the cost and promote a more efficient and low-cost operation of SPR to ensure a better energy security for China.