Abstract: Petroleum products retail is the downstream of the supply chain, affected by various factors so that severe fluctuations could be caused. As a result, people’s normal life, economic development and social stability could fluctuate heavily. The simulation model of petroleum products retail of Beijing is made by system dynamics. The model can simulate the instability causing by the shortages of upstream supply and panic buying of customer. In response to “oil shortage”, some difference policies are implemented to hold stability of petroleum products retail supply chain. Through the simulation analysis, the gas station and consumers should implement appropriate policies at the same time, in order to achieve more efficiency in responding to and solution of the“oil shortage”.