Petroleum Economics and Management

ABOUT THE COURSE:The proposed course will begin with the basic issues on microeconomics, market structure (price and non-price competition), public policy, issues of sustainability. It will then discuss the evolution of petroleum industry; geopolitics and world petroleum market; the role of OPEC. Fundamentals of petroleum business – strategic issues; dynamics of petroleum pricing; the risk, uncertainty, and decision analysis will be dealt with in depth. Implications of fiscal and trade policies will also be covered. Also, the course will discuss recent geopolitical issues like the impact of the Covid-19 pandemic and the Russia-Ukraine war on the global oil market. INTENDED AUDIENCE: Anyone interested to understand the issues related to the world oil market.INDUSTRY SUPPORT: Oil and Petroleum Companies (ONGC, IOC), Mining, Metallurgy, Naval, Geology and Geophysics, Analytics, Consulting, UPSC Aspirants

Week 1: Introduction: Relevance And Syllabus, Role of Oil: Advantage of oil as carrier of energy; Energy and SustainabilityWeek 2: Basics of Microeconomics, Analysis of Demand,Determinants of Demand, Analysis of Supply, Equilibrium, Concept of Elasticity, Revenue and Price Elasticity of DemandWeek 3: Petroleum Rents and Taxes,Welfare Analysis: Consumer and producer surplus, Government Intervention (Tax, Quota)Week 4: Movement of Oil Price, Major Pricing Events, Sector Wise use of Oil, Oil Price in the recent times (impact of Covid and lockdown measures, Russia-Ukraine War) Week 5: Structure of OPEC, Cartel, Role of OPEC in explaining oil price, Role of Saudi ArabiaWeek 6: Petroleum as a depleting resource; Can depletion and rising costs explain price development, Cost performance of global oil industry and Oil SpillsWeek 7: Structural Change and Resource Discovery, Theoeretical Framework, Sudden Discovery of Resource, Resource Curse, Dutch Disease and capacity destruction, Country Experiences Week 8: Market Structure, Oligopoly market structure, Introduction to Game Theory: Prisoner’s Dilemma, Nash Equilibrium, Competition versus Collusion Week 9: Collusive Oligopoly: Price leadership dominant firm model, CartelWeek 10: Basics of utility, Intertemporal Allocation, Hotelling's Rule, Comparison of market structure Week 11: Model of Economic Growth: without uncertainty, Discovery of Natural ResourceWeek 12: Exchange Rate, Determination of Exchange Rate, Oil Price Shock, Implications of fiscal and trade policies (with special attention to exchange rate policies, BOP crisis and Indian economy)