ENERGY SECURITY - COPING WITH MULTIPLE SUPPLY RISKS

This study starts from the observation that today's Western trading na tions are exposed to multiple risks of energy supplies, eg simultaneou s shortage of oil and gas supplies. To cope with these risks both oil and gas can be stockpiled. Adopting the viewpoint of a policy maker wh o aims at minimizing the expected cost of security of supply, optimal simultaneous adjustments of oil and gas stocks to exogenous changes su ch as an increase in the probability of supply disruption are derived Against this benchmark, one-dimensional rules such as 'oil reserves fo r 90 days' turn out to be not only suboptimal but also to suggest adju stments exacerbating suboptimality.