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Strategic Oil Stocks and Security of Supply / Giacomo Luciani       &#38; François-Loïc Henry. Bruxelles : CEPS, June 2011, 20 p.       (Working Document)http://www.ceps.eu/ceps/download/5729Holding strategic oil stocks is at first sight an obvious tool to       address potential disturbances in supplies. Rationally defining       the desirable size of stocks and designing rules for their       predictable use is an elusive task, however. A key conceptual       difficulty arises in the distinction between commercial and       strategic stocks, because a physical shortfall in the oil supply       will inevitably lead to an increase in prices. But if strategic       stocks are utilised when prices increase they become       indistinguishable from commercial stocks. This paper reviews the       legislation in force in the US and the EU on the use of strategic       oil stocks as well as the emergency response systems of the       International Energy Agency. It finds that such measures have been       activated rarely and in dubious circumstances. Alternative       approaches are proposed consisting of encouraging companies and       major consumers to hold larger stocks and seeking a cooperative       agreement with oil-producing countries for mutually beneficial       stock management.Research for this paper was carried out in the context of the       SECURE project (Security of Energy Considering its Uncertainties,       Risks and Economic Implications), funded by the European       Commission under the Seventh Framework Programme. Giacomo Luciani       participated in the SECURE project in his capacity as Director of       the Gulf Research Centre Foundation in Geneva. He is currently the       Scientific Director of the International Energy Master’s programme       at the Paris School of International Affairs (PSAI) at Sciences-Po       in Paris and a Princeton University Global Scholar. François-Loïc       Henry is a researcher at the Gulf Research Center Foundation. (©       CRPS)