IFs sets a target for energy stocks in each country as a fraction of a domestic stock base, StBase, which was defined earlier as the sum of a moving average of energy demand, smoothpendem, and a moving average of the production of oil, gas, coal, and hydro, smoothentot.  This fraction is defined by the parameter dstlen .

Stocks are initialized in the first year as dstlen multiplied by the initial domestic stock base, which is the sum of production of all energy types and an estimated value of apparent energy demand.

where

• e includes all energy types
• ENDEMEst is calculated as:

where

• e includes all energy types
• AVEPR is a weighted average energy production growth rate

In future years, IFs begins by summing the moving average energy demand, smoothpendem, across countries, storing this value as WENDEM and the same for moving average energy production from oil, gas, coal, and hydro, smoothentot, which it stores as WorldEnp.  It also sums the moving average energy demand just for countries that have low propensity for exports, XKAVE < 0.2, and stores this value as WEnDemIm.

At this point, IFs adjusts energy production by multiplying by a capacity utilization factor, CPUTF, which is assumed to be the same for all energy types in a country.

^[1]

The value of CPUTF is initialized to 1 in the first year.  How it changes in time is described in the next section after the description of the calculation of the domestic price index.

An initial estimate of energy stocks, ENST, is then calculated as the previous year’s stocks augmented by production and imports and reduced by use and exports

If after this calculation, there are excess stocks, i.e., ENST > dstlen * StBase, and there is an export constraint, given by enxl , adjustments are made to the production of oil and gas^[2], and, in turn, to energy stocks.  The total reduction in oil and gas production is given as the amount of excess stocks, with a maximum reduction being the total amount of oil and gas production.  This total amount of reduced production is then shared proportionately between oil and gas.  The total reduction is also removed from ENST.

Later, after the determination of prices, ENST is modified to: 1) ensure that they are not less than zero and 2) to account for any global shortfalls.  These modifications are described in the next section.