Not all oil types are alike

Jochen Güntner, Michael Irlacher and Peter Öhlinger
Authors registered in the RePEc Author Service: Peter Öhlinger and Jochen Güntner

No 2023-11, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: Motivated by the European Union's debate on sanctioning crude oil imports from Russia, we estimate the elasticity of substitution between different crude oil types. Using European data on country-level crude oil imports by field of origin, we argue that crude oil is not a homogenous good and that the relevant substitutability for analyzing the impact of trade sanctions must account for the quality of different oil types in terms of their API gravity and sulfur content. Our results suggest that, by neglecting these differences in quality, standard estimates significantly underestimate the production disruptions in crude oil refining resulting from sanctions.

Keywords: Crude Oil Trade; Elasticity of Substitution; Refinery Economics; Sanctions (search for similar items in EconPapers)
JEL-codes: F14 F51 L71 Q37 Q41 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-cis, nep-ene, nep-int and nep-tra
Note: English
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http://www.econ.jku.at/papers/2023/wp2311.pdf (application/pdf)

Related works:
Working Paper: Not All Oil Types Are Alike (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2023-11

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