Title: Sustainable petroleum supply chains created during economic crisis in response to US Government policies
Authors: Davoud Ghahremanlou; Wieslaw Kubiak
Addresses: Faculty of Business Administration, Memorial University of Newfoundland, St. John's, NL, Canada ' Faculty of Business Administration, Memorial University of Newfoundland, St. John's, NL, Canada
Abstract: Coronavirus disease (COVID-19) and the Saudi Arabia-Russia Oil Price War have created economic catastrophe. This crippled the US sustainable petroleum supply chain (SPSC), which is created in response to government policies, as a solution to global warming and achieving energy independency. Government and investors are striving to rescue the SPSC from bankruptcy. This motivated us to investigate creating a robust SPSC. Thus we extended the risk neutral study performed by Ghahremanlou and Kubiak (2020a) for regular economic conditions. To that end, we propose a risk averse approach by applying conditional value-at-risk (CVaR) and developing a two-stage stochastic programming model. We conduct a case study in Nebraska and provide investment decisions that can withstand economic crises. Our results show that for the survival of the SPSC, government must at least consider 2.151 $/gal tax credit for US cellulosic bioethanol blended with gasoline, and push the blend wall to at least 15%.
Keywords: COVID-19; Saudi Arabia-Russia Oil Price War; conditional value-at-risk; CVaR; sustainable petroleum supply chain; SPSC; two-stage stochastic programming; government policies.
International Journal of Sustainable Economy, 2020 Vol.12 No.3, pp.205 - 232
Received: 31 May 2020
Accepted: 29 Jul 2020
Published online: 24 Nov 2020 *