Should oil-rich members of OPEC invest in the oil refinery industry? This is a crucial energy policy question for such economies. We offer theoretical models for a vertical integration strategy within an oil-producing economy, based on a risk-hedging view. The first model highlights the trade-off between return and risk-reduction features of upstream/downstream sectors. The dynamic model demonstrates the volatility of total budgetary revenue of each sector. Our theory-guided empirical analysis shows that though the average markup in the refining sector is significantly smaller than the profits in the upstream, downstream investment can provide some hedging value. In particular, the more stable and mean-reverting refining margins provide a partial revenue cushion when crude oil prices are low. We discuss the risk-hedging feature of the refinery industry when the crude oil market faces supply versus demand shocks.

中文翻译：

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欧佩克国家炼油厂产能投资的风险对冲观点

石油输出国组织的石油资源丰富的成员国应该投资炼油业吗？对于这些经济体来说，这是一个关键的能源政策问题。我们基于对冲风险的观点，为石油生产经济体中的垂直整合战略提供理论模型。第一个模型突出了上游/下游部门的回报和风险降低特征之间的权衡。动态模型展示了每个部门总预算收入的波动性。我们以理论为指导的实证分析表明，虽然炼油行业的平均加价率明显低于上游的利润，但下游投资可以提供一定的对冲价值。特别是，当原油价格较低时，更稳定和均值回归的炼油利润可提供部分收入缓冲。