Will China's Strategic Stockpiles Provide the Security of Oil Supply it Needs for the Coming Decade?

Abstract

Chinas strategic stockpiles system was firstly built in 2004. After 8 years of preparation and construction, strategic petroleum reserve (SPR) has already gained its capacity. However, whether this growing capacity can meet the need of unexpected supply shock is still a question. This paper will analyze supply risks after making a brief study of different types of oil risks. In the second part, the paper will have a glance at the history and prospective of Chinas SPR system before trying to identify the optimal level of SPR. The paper will then have a horizontal comparison with identical countries and associations SPR policies, attempting to draw experiences from them. Based on all these discussions above, the last part will have an estimation of future SPR level and the optimal level requested. I then come to the conclusion under a series of strict assumptions that Chinas SPR will cover its supply shock in the coming decade.