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Pegging input prices to output prices: a special price adjustment mechanism in long-term CO2 sales c

来源:湖南大学经济与管理研究中心  日期:2017-11-28 人气:

  间:Nov.29, 2017 (Wednesday) 10:00 AM

 

  点:Room 205, Second Teaching Building

 

  题:Pegging input prices to output prices: a special price adjustment mechanism in long-term CO2 sales contracts

 

 

主讲人: 高甡 

 

 Assistant Professor of CEFMS

 

 

  要:

Oil firms that adopt the technique of CO2-enhanced oil recovery use CO2 as an input to increase oil production. Long-term CO2 sales contracts that are commonly used in the industry often include a special price adjustment clause—the CO2 price is pegged to the oil price. This is very different from typical price adjustment clauses in other industries’ long-term contracts that peg the output price to input prices. Using a stylized model, we are able to show analytically that key features of the CO2 market make it always optimal for a CO2 seller to set a pegged price instead a fixed one. Numerical simulations based on an active CO2 enhanced oil recovery project suggest, however, that the pegging coefficient observed in actual CO2 contracts is significantly lower than our theory would suggest. Simulations also show that the optimal pegging coefficient is sensitive to the median oil price and CO2 utilization efficiency, but not sensitive to the volatility of the oil price distribution. The low contracted CO2 price may reflect ex ante uncertainty about CO2 utilization efficiency.

 

 

报告人简介: 

Dr. Shen Gao joined the Center for Economics, Finance and Management Studies (CEFMS) at Hunan University in Fall 2017 as an assistant professor in Economics. He got his Ph.D. in Economics at the University of Wyoming. His research interests mainly include Energy Economics, Environmental & Resource Economics, and Industrial Organization. His current research focuses on the price-adjustment mechanism in commercial CO2 sales contracts used in the oil industry. 


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