A model to assess the impact of employment policy and subsidized domestic fuel prices on national oil companies |
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| Affiliation: | 2. Associate Professor in Maritime Logistics, Kedge Business School, Marseille, France;1. Environmental Defense Fund, 257 Park Ave South, New York, NY 10010, United States;2. Environmental Defense Fund, 301 Congress Ave., Austin, TX 78701, United States;3. Pace Energy and Climate Center, 78 North Broadway, White Plains, NY 10603, United States;4. Environmart, 1720 Barton Springs, Austin, TX 78704, United States;5. Duke Nicholas School, 450 Research Dr., Durham, NC 27708, United States;1. School of Management and Economics, Beijing Institute of Technology, Beijing 100081,China;2. Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China;3. College of Economics and Management, Beijing University of Technology, Beijing 100124, China;4. School of Environment, Division of Air Pollution and Its control, Tsinghua University, Beijing 100084, China;5. School of Economics and Management, Yanan University, Yanan Shaanxi 716000, China;6. State Grid Fujian Procurement Co., Ltd, Fujian 350001, China |
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| Abstract: | National oil companies (NOCs) control international oil markets. Nevertheless, by the end of the 2000s, their share of the industry's total revenues was only 35% while controlling more than 70% of the oil reserves and 65% of the gas reserves. Conventional financial theory prescribes that the proper management of an enterprise should seek the maximization of the NOCs' profits. However, maximization of profits is not their only objective. Their targets often include non-commercial objectives, such as domestic fuel subsidies and employment. This paper develops a model to assess the impact of domestic fuel subsidies and employment on NOCs’ performance, which clarifies the trade-offs among non-commercial objectives and NOCs' market value, production, and reinvestment. The model is applied and calibrated to the Colombian NOC to find the financial and operative effects of these non-commercial objectives for different scenarios. |
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