System Dynamics ‘95 — Volume II
Diary of an Oil Market Model:
How an interactive system dynamics modelling process was used with Shell
managers to resolve conflict and to generate insight
David C. Lane - London School of Economics, Houghton Street, London. WC2A 2AE, U.K.
Abstract - Managers involved in the refining and trading of oil had conflicting
views on the relationship between output and cash generation in their market. A day
by day account is given of a project in which the market was modelled. The models
ostensibly represented the view of the Refining Strategy staff but consultation with
other individuals allowed the views of the local Trading department to be
represented too. The tools of system dynamics were used to articulate assumptions
and to support a ‘dialogue' in which disagreements regarding macro-behaviour
were transformed into debates over specific relationships. The repeated re-crafting
of a STELLA model led to alterations in the understanding that the refining
managers had of the key variables and of their dynamic interaction. In consequence,
the participants aligned behind a single view of the market's behaviour, as well as
admitting to increased respect for the expertise of the other group.
AUTHOR'S NOTE
This paper concerns the process of construction of an oil market model.
To try to give a sense of the evolution of the model and also a glimpse of the changing thinking
of those involved, | have chosen to use the format of a diary. | hope that this displays the
participants not as elements of an organisational chart but as characters. real people facing
problems and uncertainties who make contingent, boundedly rational decisions. It may also help to
convey the frustrations and disappointments, the pleasures and the satisfactions of one example of,
system dynamics modelling.
However, the page length necessary to contain the day-by-day account and to provide the
numerous figures of the different forms of the model exceeds the Conference Proceedings
requirement. I have therefore chosen not to provide a truncated version of the paper but rather to
provide a full version at the Conference presentation in the form of an LSE Working Paper.
Further version are available from me the above address.
David C. Lane
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