Accession Number : ADP002812

Title :   Tactical Buying Decisions for Strategic Petroleum Reserve Spot Procurements: The Tunnel Theory,


Personal Author(s) : Ervin,L. C.

Report Date : 1983

Pagination or Media Count : 7

Abstract : Procurement of crude oil on the spot market at minimum prices requires economic analysis which focuses on the discovery of market price levels and the determination of short-run market direction. This paper presents the results of statistical research concerning the formation of spot prices in the crude oil market. Variables suggested by the economic theory of raw material and commodity markets are investigated. The demand for incremental (spot) volumes of crude oil is found to be derived from the demand for incremental volumes of petroleum products. Insights gained from this analysis are used to establish tactical decision rules to be followed when making purchases under the provisions of the Defense Fuel Supply Center's open and continuous solicitations on behalf of the Department of Energy's Strategic Petroleum Reserve. The results of this research are also shown to be important input for strategic decisions concerning the mix and timing of spot and long-term contract procurements.

Descriptors :   *Government procurement, *Oil products, *Market research, Economic analysis, Decision making, Strategy, Symposia

Distribution Statement : APPROVED FOR PUBLIC RELEASE