Petroleum Management Game-1975 (PMG75)

Authors

  • E. Z. Million

Abstract

"The petroleum “economy,” as the term is used here, represents a hypothetical environment in which oil companies are competing. The economy is closed and exists within the simulated national economy. A few of the more important assumptions and restrictions made in the model are listed below: a) The initial size and number of oil companies in the simulation is variable. Up to a maximum of eight competing companies, with one additional company programmed internally to simulate the aggregate effect of independent competition. b) The petroleum products are limited to premium, regular and unleaded gasoline, distillage and residual fuel oil, jet fuel and petrochemicals. The quality characteristics of the products are generated by the model and are not affected by players’ decisions. c) The products are marketed in retail, wholesale (industrial and commercial), and unbranded jobber markets. In each market, the competing companies are assigned an initial share, with aggregate independent competition taking the remainder. There is no geographic division of the markets. d) All refining improvements and operations are slanted toward maximum gasoline production at the market octane level. New capital may be assigned to increase petrochemical capacity. e) Transfers, exchanges, and agreements on petroleum products among the various competing companies are not allowed. In this connection, joint drilling ventures are not permitted. f) The simulated national economy is extrapolated from that in existence in the United States in the period 1970-1975. The petroleum economy represents a fixed percentage of the national economy with respect to income and demand patterns. g) Each play is considered to the decision inputs are separated into those capital budgeting decisions which are only made annually, or every fourth playing quarter, and those operational decisions which must be made each quarter. "

Downloads

Published

1977-03-13