Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

This study is to estimate the risk premium for oil stockpiling. This study develop a simple economic model of the oil stockpile risk averse premium connected with public and private oil reserves. This premium is derived from expected utility model that consists of a two generation model. Premium are influenced by the degree of risk aversion, elasticities of demand, and several covariance associated with oil prices. Calculation suggests that private premium has little risk-reduction value. The public premium is sensitive to the relative risk-aversion coefficient and demand elasticities.