Integration optimization of production and transportation of refined oil: A case study from China

Abstract

The logistics management of refined oil under a separation of production and transportation leads to high logistics costs and a mismatch between the supply and demand sides. This paper intends to develop a general framework to assess the impact of the integration of the production and transportation in terms of economic, environmental, and energy benefits. Firstly, this paper proposes a tactical-level mathematical model for optimizing the integration of production and transportation of refined oil to minimize the total cost. In the model, several factors, such as level of market demand, production capacity limits, transportation modes, and transportation capacity, are taken into consideration. Then, the energy, economy, and environment analysis method are applied to assess the impact of the integration on the field of refined oil logistics. Four scenarios are set up and a comparative analysis is carried out in detail in China. The optimal resource allocation scheme and production adjustment scheme for each scenario are obtained. The results show that after the integration, the logistics cost is reduced by 6.8 %− 11 %, the greenhouse gas emission is reduced by 7.3 %− 17.7 %, and the energy consumption per unit turnover is reduced by 4.4 %− 7.4 %. This proves that the integration of production and transportation guided by the proposed method performs positive economic, environmental, and energy benefits. Finally, policy implications are provided.