Associated petroleum gas market: Pricing mechanisms

Occupation: Chief Researcher
Affiliation: Central Economics and Mathematics Institute, Russian Academy of Sciences (CEMI RAS)
Address: Moscow, Ulitsa Bestuzhevaykh, 25V, ap,76 Russsia, Moscow, ulitsa

Journal name

Ekonomika i matematicheskie metody

Edition

Volume 57 Issue 4

Pages

49-58

Abstract

In Western Siberia, the main oil-producing region of Russia, all functioning regulated marketsof associated petroleum gas (APG) have been liberalized. Because of the monopoly-monopsony structure there is a threat of market prices deviation from socially optimal levels, corresponding to the maximum of public good. The analysis of this threat and assessment of the factors that support it is an urgent problem, which has not yet been covered in the scientific literature. The purpose of the study is to assess the consequences of the liberalization of APG markets. The tool for solving the problems of the study is the economic theory of formation of market equilibrium prices in the joint production of APG and oil. On a liberalized APG market, the maximum public welfare corresponds to a set of market prices, which are determined when considering a virtual competitive market. The actual price is formed under the influence of non-market factors. The liberalized market has no mechanism for forming a socially optimalcomposition of non-market factors, and the parties have no information allowing them to determine the corresponding socially optimal APG price. Therefore, it must be set by the regulator. The algorithms for calculation of marginal costs of joint production of oil and APG and socially optimal price of APG are constructed.

Keywords

economic theory, market of associated petroleum gas, monopoly-monopsony structure of the market, virtual, pricing in the market, economic-mathematical modeling, price regulation, price liberalization, public welfare, trajectory of reforms

Received

18.11.2021

Publication date

13.12.2021

Number of characters

31580

Cite

GOST	Chernavskii S. Associated petroleum gas market: Pricing mechanisms // Ekonomika i matematicheskie metody – 2021. – V. 57. – Issue 4 C. 49-58 [Electronic resource]. URL: https://emm.jes.su/S042473880017524-5-1 (circulation date: 02.05.2024). DOI: 10.31857/S042473880017524-5
MLA	Chernavskii, Sergei "Associated petroleum gas market: Pricing mechanisms." Ekonomika i matematicheskie metody 57.4 (2021):49-58. DOI: 10.31857/S042473880017524-5
APA	Chernavskii S. (2021). Associated petroleum gas market: Pricing mechanisms. Ekonomika i matematicheskie metody 57(4), pp.49-58 DOI: 10.31857/S042473880017524-5

100 rub.

When subscribing to an article or issue, the user can download PDF, evaluate the publication or contact the author. Need to register.

Number of purchasers: 0, views: 300

Readers community rating: votes 0

1. Chernavsky S.Ya. (2013). Reforms of the energy regulated branches in Russia. Moscow, St. Pe-tersburg: Nestor-Historia (in Russian).

2. Chernavsky S.Ya., Eismont O.A. (2005). Economic analysis of associated petroleum gas market in Russia. Economics and Mathematical Methods, 41, 4, 30–38 (in Russian).

3. Eliseev G.P. (2001). Is an increase in the price of associated petroleum gas useful? IQ HSE Scientific and Educational Portal. June 22. Available at: https://iq.hse.ru/news/177824831.html (in Russian).

4. Kiselev E.A. (ed.) (2020). State Report “On the state and use of mineral resources of the Russian Federation in 2019”. Moscow: Ministry of Natural Resources and Environment of the Rus-sian Federation. 490 p. Available at: https://www.mnr.gov.ru/docs/o_sostoyanii_i_ispolzovanii_mineralno_syrevykh_resursov_rossiyskoy_federatsii/gosudarstvennyy_doklad_o_sostyanii_i_ispolzovanii_mineralno_syrevykh_resursov_rossiyskoy_federatsii (in Russian).

5. Knizhnikov A.Y., Ilyin A.M. (2017). Problems and prospects of the use of waste oil gas in Russia. Moscow: World Wildlife Fund (WWF) (in Russian).

6. Kryukov V.A., Silkin V.Y., Tokarev A.N., Shmat V.V. (2008). How to extinguish flares at Rus-sian oil fields: Institutional analysis of conditions for complex hydrocarbon utilization (by example of associated petroleum gas). Novosibirsk: Institute of Economics and Industrial Engineering of the Siberian Branch of the RAS (in Russian).