Constraints in Gas for Oil Substitution in the USSR: The Oil Refining Industry and Gas Storage

While Soviet oil output peaked in the early 1980s, natural gas output grew rapidly. As a result the Soviets have sought to use more natural gas as a boiler fuel, freeing petroleum for the higher priority mobile and chemical uses. Lack of depth in Soviet oil refining and lack of gas storage capacity are the two key constraints in this gas-for-oil substitution strategy. This paper considers the prospects for easing these constraints by restructuring the petroleum refining industry, and providing enough gas storage capacity to supply all gas demand during the winter. Journal of Economc Literature, Classification Numbers: 124, 723.