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Center for Energy Studies



Winter is Coming: Controlled Conflicts and the Oil-Price Geopolitical-Risk Premium

Mahmoud A. El-Gamal

Winter is Coming: Controlled Conflicts and the Oil-Price Geopolitical-Risk Premium.

This paper presents a simple dynamic growth model of investment, consumption, passive military spending, and active military spending for an oil-exporting country. It argues that under conditions of significant geopolitical strife, a country might engage in a military conflict of limited scope and extent to drive up oil prices and revenues.