Optimal regional distribution of petroleum products

Abstract

An economic model is presented which applies linear programming to determine the most efficient distribution of petroleum products among industries and regions. The model maximizes employment while (1) ensuring a balanced economy via input-output relationships, (2) maintaining at least the minimum production of basic goods and services necessary to prevent abnormally high inflation which could be caused by shortages, (3) ensuring that regional economies do not become severely depressed due to energy unavailability for their industrial base, (4) making sure that the industry capacity in each region is not exceeded, and (5) allowing policy makers control over the balance of payments. The model utilizes an input-output framework at both the national and regional level and makes adjustments for regional differences by incorporating regional multipliers.