Environmental Change: Oil Trading and Risk-Management Implications by Peter C. Fusaro

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This paper discusses the implications for oil trading and risk-management of the move toward more stringent global environmental standards, particu... (More) This paper discusses the implications for oil trading and risk-management of the move toward more stringent global environmental standards, particularly as they affect petroleum products. Driven by the U.S. impetus toward tighter environmental laws and fuel quality specifications, a new type of “environmental risk” has entered oil markets. Its impact will influence global oil-trading patterns in the physical market and will bring about greater price volatility to both cash and oil futures markets. The author looks at how this new risk will increasingly be managed via financial instruments. (This article by Peter C. Fusaro, “Environmental Change: Oil Trading and Risk-Management Implications,” was published as Occasional Paper 23. Boulder, Colorado: The International Research Center for Energy and Economic Development, 1994. ISBN 0-918714-44-3). (Less)