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The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis
Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 139-743, Korea
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Received: 20 May 2012; in revised form: 27 August 2012 / Accepted: 27 August 2012 / Published: 6 September 2012
Abstract: Diesel is an essential factor in industrial production and development, and thus its stable supply is a crucial element for economic growth. The supply shortage of diesel has massive economic costs, namely supply shortage costs. This paper attempts to apply input-output (I-O) analysis to measuring the supply shortage cost of industrial diesel in Korea by finding an optimal way of allocating the limited diesel resources to different sectors according to the objective of maximizing overall value-added. To this end, a static I-O framework is presented using a recently published I-O table. The results indicate that the marginal cost of unsupplied diesel ranges from KRW 716 (USD 0.65) to KRW 113,376 (USD 103.07) per liter and these costs depend not only on the shortage rate of each non-diesel sector but also on the level of its own final demand. The quantitative results are useful for policy-makers to set economic reliability standards, develop optimum curtailment levels and priorities, and plan curtailment strategies for diesel supply and demand.
Keywords: diesel; supply shortage cost; marginal cost; input-output analysis; Korea
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MDPI and ACS Style
Kim, M.; Yoo, S.-H. The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis. Energies 2012, 5, 3465-3478.
Kim M, Yoo S-H. The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis. Energies. 2012; 5(9):3465-3478.
Kim, Myunghwan; Yoo, Seung-Hoon. 2012. "The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis." Energies 5, no. 9: 3465-3478.