The Strategic Determinants of Oil Stockpiling Behavior Open Access
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Oil is a vital input to industrialized economies. Despite efforts to moderate their fuel consumption, oil-importing nations remain vulnerable to the adverse consequences of oil supply disruptions. This dissertation examines an understudied area of energy security policy that constitutes a concrete response to oil supply insecurity: strategic oil stockpiling. The International Energy Agency (IEA) requires member countries to maintain oil stockpiles equivalent to 90 days’ worth of imports. Nations meet this obligation in different ways. Some governments hold public stocks, which are costly but represent a robust policy instrument. Other governments take a comparatively weaker approach, by mandating that private companies hold extra inventory. Industry mandates minimize costs, but they do little to improve energy security. This dissertation explains what determines nations’ approaches to oil stockpiling based on their threats and capabilities.This project distinguishes between economic vulnerability to oil price shocks in the global market and national security vulnerability stemming from the threat of a physical supply cutoff. Oil stocks address the former through collective IEA releases and the latter through replacing lost imports. Market power impacts oil stockpiling strategy in countries facing primarily economic vulnerability. Large states, which can decisively impact the success or failure of a collective IEA release, invest in robust strategic stockpiling programs which moderate the economic threats by ensuring the IEA’s collective capability. In contrast, small, economically vulnerable IEA members minimize costs, because the efficacy of their programs does not impact market stabilization outcomes. Small IEA members facing national security threats stemming from the potential of oil coercion pursue robust government-owned oil stockpiles despite their inability to influence the market, because they treat energy security as a matter of national sovereignty.This dissertation evaluates this theory of oil stockpiling behavior using a multi-methodological empirical strategy designed to capture both broad trends across the IEA as well as the nuances of energy security decision making in individual countries. The project first tests multiple hypotheses derived from this explanatory model with a statistical analysis of government oil stockpile levels in IEA countries from 1984-2012. This analysis points to the importance of state-level factors such as dependence on hostile supply sources and market power. Case studies of oil stockpiling in the United States, Sweden, and the Czech Republic buttress the quantitative results. The discourses on energy security in each of these countries further highlights the role of threats and capabilities in explaining differences in oil stockpiling policy. The project concludes with a discussion of contributions and policy implications and an application of the project’s logical model to strategic oil storage in China.