bluuebunny/crossref_metadata_2025 huggingface dataset:
The Performance of the U.S. Market for Independent Electricity Generation
Authors: Comnes G. Alan , Kahn Edward P. , Bekien Tim N.
Published: May 2011

We examine recent evidence on the economic performance of the U.S. independent electricity generation market. A sample of power purchase contracts for 26 independent power facilities is used as the basis of this assessment. The contracts were executed in various years between 1987-94. We describe qualitative features of the contracts, including dispatchability and allocation of fuel price risk. We standardize the price formulas of the contract sample and conduct a simple statistical analysis. Because of residual price variation and an indication that buyer willingness-to-pay is highly correlated with price, we conclude that bulk power sold by independent power producers is a heterogeneous product, and evidence for competition in market prices is weak.
An Actions-Based Estimate of the Free Rider Fraction in Electric Utility DSM Programs
Authors: Malm Eric
Published: May 2011

Most estimates of the free rider fraction are based on ex-post surveys of program participants. Program participants who indicate that they would have made the supported changes without the program are labeled as "free riders." This paper provides an estimate of the free rider fraction based on consumer actions. A set of energy-use clusters acts as a base against which the likely behavior of consumers in the absence of an efficiency program can be assessed. The clusters can also be used target spending at customers who are least likely to invest in efficiency on their own. The Actions-Based estimate does not suffer from the biases implicit in the standard ex-post survey estimates.
Explaining the Variation in Elasticity Estimates of Gasoline Demand in the United States: A Meta-Analysis
Authors: Espey Molly
Published: May 2011

Meta-analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand in the United States. Elasticity estimates from previous studies are used as the dependent variable with data characteristics, model structure, and estimation technique as the independent variables. Included among the explanatory variables a rejunctional form, lag structure, time span, and national setting (U.S. versus the U.S. pooled with other countries). Inclusion of vehicle ownership in gasoline demand studies is found to result in lower estimates of income elasticity, data sets which pool U.S. and foreign data result in larger (absolute) estimates of both price and income elasticity, and the small difference between static and dynamic models suggests that lagged responses to price or income changes are relatively short. This study also found that elasticity estimates appear relatively robust across estimation techniques.
Strategic Interdependence in European East-West Gas Trade: A Hierarchical Stackelberg Game Approach
Authors: Grais Wafik , Zheng Kangbin
Published: May 2011

The current and potential benefits of European East-West gas trade are enormous for all participants. The new and more complex structure of the natural gas transit system, as emerged with political and economic changes in Eastern Europe and the former Soviet Union, has created uncertainties about the interdependence and interactions among the participants. Using a Stackelberg game with three layers of players (suppliers, transiters and importers), this paper establishes a framework to analyze rational behaviors of the participants and reasonable ways to formulate transparent, flexible, and incentive-compatible contracts. This framework is also used to show how to modify the trade contract to accommodate changes in the gas trade environment. Improving predictability of the players' reactions to external changes can enhance the reliability of gas trade and allow its expansion to benefit all participants.
CO2, Emission Reduction Costs in the Residential Sector: Behavioral Parameters in a Bottom-Up Simulation Model
Authors: Jaccard Mark , Bailie Alison , Nyboer John
Published: May 2011

Cost estimates for reducing energy-related CO2 emissions vary with modeling assumptions and methods. Much debate has centered on the tendency for top-down models to suggest high costs and for bottom-up models to suggest low costs. This study incorporates behavioral parameters, derived from end-use equipment acquisition surveys, in a bottom-up simulation model of the residential sector in order to probe the basis for differing cost estimates and to test various policy suggestions. Simulating the effect of carbon taxes on a business as usual forecast, the results suggest that a CO2 tax will lead to significant net costs of adjustment if the factors leading to higher private discount rates reflect in part real costs and risks. The results also suggest that it may be in society's interest to pursue fuel switching policies with equal or greater vigour than energy efficiency improvements for the goal of reducing CO2emissions in the residential sector. As further research helps to distinguish the significance of these perceived costs and risks, and to refine projections of technology costs, the inputs to the model can be adjusted in order to refine the estimates for policy makers of CO2 reduction costs and of appropriate strategies for achieving reduction goals.
Energy Efficiency, Economic Efficiency and Future CO2Emissions from the Developing World
Authors: G. Pearson Peter J. , Fouquet Roger
Published: May 2011

This paper examines the potential role of energy efficiency and economic efficiency in influencing the future carbon dioxide emissions of developing countries. It explores and offers support to the hypothesis that, despite the potential value to the developing world of greater energy efficiency, if tight restrictions on global carbon dioxide emissions were considered necessary, efficiency alone could make only a limited contribution to restraining the projected growth of developing country emissions. This is because of the projected rapid energy growth rates in most developing countries, especially in the industrial sector and from fossil-fuelled electricity and transport, associated with growth in per capita incomes and population. The potential contribution of other possible measures to address global carbon dioxide emissions, particularly fuel switching, is also briefly examined.
Implementation of Priority Insurance in Power Exchange Markets
Authors: Wilson Robert
Published: May 2011

Traders in a power exchange can use insurance to hedge against losses from curtailment by the system operator. If the system operator is liable for these reimbursements then its incentives encourage efficient real-time dispatch. This paper reviews the details of implementing such a scheme when third-party insurers offer insurance in an auxiliary competitive market, or the power exchange operates as a mutual insurance association of the traders. Because higher reimbursements entail higher service priorities, the actuarial premium for pure insurance must be accompanied by a surcharge for service priority. The amount of this surcharge can be inferred from the price of pure insurance. The Appendix shows that omission of this surcharge distorts traders' incentives in the power exchange.
Fairness Measures and Importance Weights for Allocating Quotas to OPEC Member Countries
Authors: Alsalem Ahmad Saleh , Sharma Subhash C. , Troutt Marvin D.
Published: May 2011

This study considers what we call the "degree of optimality" of quota assignments for each OPEC member country based on certain proposed fairness "factors. We argue that these factors should ideally be based on energy and economic conditions that ought to be taken into consideration when production quotas are assigned. Thus, in this study, importance weights based on proven reserves, available productive capacity, GDP per capita and domestic investment needs are first obtained for allocating fair quotas to each member country in the period 1982-1990. Then a degree of fairness optimality index is computed for each member country and is applied to measure the performance of these countries during the quota system period. Our investigations reveal that OPEC appears to give greater importance to the energy factors, proved reserves and productive capacity, although domestic investment needs seem to play a significant role in determining the direction of quota assignments. Statistical tests reveal that all the weights are consistent over time. Finally, we observe that the member countries whose ideal quotas are based on low GDP per capita have higher degrees of optimality than those whose ideal quotas are based on proven reserves or available productive capacity. The computed importance weights and optimality measures can be used both by OPEC and energy analysts interested in OPEC behavior.
Pollution Control and Energy Conservation: Complements or Antagonists? A Study of Gasoline Taxes and Automobile Fuel Economy Standards
Authors: Espey Molly
Published: May 2011

Energy conservation regulations, such as fuel taxes and fuel economy mandates for automobiles, are often assumed to reduce air pollution in lock step with the reduction in fuel consumption. Under the current system of tailpipe emissions regulations in the United States, this is not necessarily true. This paper uses a simple graphical analysis to illustrate the relative impact of fuel taxes and fuel economy standards on pollution levels given the current tailpipe emissions standards and an alternative emissions standard. Under current tailpipe emissions standards, increases in fuel economy would actually raise emissions, and significantly larger fuel taxes would be required to achieve the same level ftollution reduction as under the proposed alternative standard. These results confirm earlier findings that used mathematical and stochastic simulation methods to address this issue.
The Cost of Power Outages in the Business and Public Sectors in Israel: Revealed Preference vs. Subjective Valuation
Authors: Beenstock Michael , Goldin Ephraim , Haitovsky Yoel
Published: May 2011

Cross-section data on investment in back-up generators and uninterruptable power supplies (UPS) are used to infer the implied cost of electricity outages in the business and public sectors in Israel. Two-limit tobit models of the demand for back-up are estimated and used to simulate the mitigated and unmitigated cost of power outages. These "revealed preference estimates of outage costs are then compared with estimates based on the method of subjective evaluation.
Natural Gas in the U.S.: How Far Can Technology Stretch the Resource Base?
Authors: Cleveland Cutler J. , Kaufimann Robert K.
Published: May 2011

We review the theoretical underpinnings of the exponential model, the amount of gas discovered per unit effort, a quantity called yield-per-effort (YPE), and estimate an econometric model that represents the historical determinants of the YPE for nonassociated gas discoveries in the lower 48 states from 1943 to 1991, the entire period for which the requisite data are available. Results indicate the YPE declines as the exponential function of cumulative drilling when short run changes in drilling effort, real gas prices, and shifts between onshore and offshore are accounted for. We explicitly test and reject the hypothesis that technological change has arrested or reversed the long run decline in YPE. We also discuss some alternative models of YPE that misrepresent the interplay of depletion and technical innovation, as well as the process of innovation itself, and the statistical and methodological shortcomings of the empirical analyses used to support several alternative models of YPE.
Regionalization in the World Crude Oil Market
Authors: Gülen Gürcan S.
Published: May 2011

According to Weiner (1991), the world oil market is said to be unified' if prices for same quality crude oils from different regions of the world move together and regionalized otherwise. This hypothesis of Weiner is kept unchanged. However, we are more interested in the efficiency implications of a regionalized world oil market than its policy implications as discussed by Weiner. Specifically, if these prices deviate from each other, i.e., the market is fragmented, there will be arbitrage opportunities for crude oil traders which would render the market inefficient. In this paper, the regionalization hypothesis is investigated via cointegration tests using both spot and contract prices for fifteen crude oils. Three groups of similar quality crudes are formed based on API gravity and sulfur content. Tests of cross-group co-movement which provided evidence for significant quality differences between heavy and light crudes further supported our groupings. Then the co-movement of prices is tested within each group. The crash in 1986 is explicitly dealt with following methods described in Perron (1989). Results indicate that the world crude oil market is unified over the 1980-95 period.
CO2 Emissions Limits: Economic Adjustments and the Distribution of Burdens
Authors: Jacoby Henry D. , Eckaus Richard S. , Ellerman Denny A. , Prinn Ronald G. , Reiner David M. , Yang Zili
Published: May 2011

Policies under consideration within the Climate Convention would impose CO2 controls on only a subset of nations. A model of economic growth and emissions, coupled to an analysis of the climate system, is used to explore the consequences of a sample proposal of this type. The results show how economic burdens are likely to be distributed among nations, how carbon "leakage" may counteract the reductions attained, and how policy costs may be influenced by emissions trading. We explore the sensitivity of results to uncertainty in key underlying assumptions, including the influence on economic impacts and on the policy contribution to long-term climate goals.
Impact of Pay-at-the-Pump on Safety Through Enhanced Vehicle Fuel Efficiency
Authors: Khazzoom Daniel J.
Published: May 2011

Pay-at-the-Pump (PATP) is a proposal for replacing the lump-sum payment of auto insurance by a system of surcharge on gasoline price. This study examines the main argument made against PATP-namely, that by stimulating the demand for fuel-efficient vehicles, PATP results in a drastic deterioration in highway safety. The study finds the evidence does not support this argument. Moreover, if as critics argue, PATP does indeed result in a substantially accelerated replacement of older vehicles with more fuel-efficient ones, the introduction of PATP may be expected to result in a substantially safer fleet of vehicles, as well.
Market Power, International CO2, Taxation and Oil Wealth
Authors: Berg Elin , Kvemdokk Snorre , Rosendahl Knut Einar
Published: May 2011

We present an intertemporal equilibrium model for fossil fuels, and study the effects on oil prices, extraction paths and oil wealth of an international carbon tax on fossil fuel consumption Our conclusion is that a carbon tax will hurt OPEC more than other producers, as the cartel is induced by its market power to restrain production in order to maintain the oil price. Thus, the effects on the oil wealth of the competitive fringe are minor, while OPECs wealth is considerably reduced. We also show by applying a competitive model that this result is due to market structure, and not to differences in the resource base.
Oil Spills, Workplace Safety and Firm Size: Evidence from the U.S. Gulf of Mexico OCS
Authors: Iledare Omowumi O. , Pulsipher Allan G. , Dismukes David E. , Mesyanzhinov Dmitry
Published: May 2011

Accidents on offshore oil and gas platforms have declined dramatically during the past decade, yet concern about safety and environmental damages from offshore operations seems to have intensified. In the U.S. Gulf of Mexico, some of this concern is premised on an offshore restructuring caused by major oil and gas companies investing more heavily in exploration and production (E&P) in foreign countries, leaving more domestic E&P to smaller 'independents' assumed to be less careful and capable than majors. Both industry, and regulatory specialists believe this trend will increase the risk of accidents and oil spills. However, our analysis found no evidence that more independents would threaten workers' safety or the marine environment. In fact, on average independents had a slightly better record than the majors. We also found that the, Minerals Management Service's platform inspection program had a beneficial and statistically significant effect, decreasing both offshore accidents and oil' spills.
Resource Depletion and Technical Change: Effects on U.S. Crude Oil Finding Costs from 1977 to 1994
Authors: Fagan Marie N.
Published: May 2011

A dramatic decline in U.S. crude oil finding costs has provoked intense interest in the extent to which technical progress has mitigated the effects of resource depletion. Analysis of depletion and technical change using data for 27 large U.S. oil producers from 1977-1994 is conducted using a translog cost function. The translog provides a flexible representation of the underlying production function, and controls for changing factor prices. The model also controls for the effect of prospect highgrading. Results show that an accelerating rate of technical change reduced average finding cost 15 percent (onshore) and 18 percent (offshore) per year by 1994. Resource depletion increased cost at an average annual rate of 7 percent onshore and 12 percent offshore. Technical change was relatively labor-using both onshore and offshore.
Implications of Output Price Risk and Operating Leverage for the Evaluation of Petroleum Development Projects
Authors: Salahor Gordon
Published: May 2011

This paper is the first in a series that describes how Modem Asset Pricing (MAP) may be used for project evaluation in the upstream petroleum industry. It shows how MAP methods can be used to value a project, if it i's possible to split its cash-flows into two components: one for revenue and one for cost. Two design choices for a "now or never " natural gas field development are used as examples of what can be gained by this type of approach to project evaluation. The first choice involves a tradeoff between capital and operating costs, while the second involves a tradeoff between costs and potential production rate. The results show that the use of standard DCF methods can induce systematic, and possibly misleading, biases into the analyses that lie behind project design and selection.
On the Use of Modern Asset Pricing for Comparing Alternative Royalty Systems for Petroleum Development Projects
Authors: Bradley Paul G.
Published: May 2011

This paper is the second in a series that describes how Modern Asset Pricing (MAP) may be used for project evaluation in the upstream petroleum industry. It has two goals. First, it demonstrates how MAP can be applied to the general class of projects where the project manager does not have any future flexibility that must be analysed. Second, the usefulness of MAP in fiscal system analysis is illustrated by the evaluation of a series of oil-field development projects under a variety of fiscal regimes. In situations where different fiscal systems have the same effect on a discounted cash flow (DCF) basis, the value of afield to a developer may appear quite different when analysed using MAP. MAP takes into account the differing risk characteristics of the cash-flow streams of the developer and the government or resource owner, and provides us with an added dimension of information: comparisons of how different fiscal systems distribute risk among the parties involved in the project.
Alternative Models of Uncertain Commodity Prices for Use with Modern Asset Pricing Methods
Authors: Baker Malcolm P. , Mayfield E. Scott , Parsons John E.
Published: May 2011

This paper provides an introduction to alternative models of uncertain commodity prices. A model of commodity price movements is the engine around which any valuation methodology for commodity production projects is built, whether discounted cash flow (DCF) models or the recently developed modern asset pricing (MAP) methods. The accuracy of the valuation is in part dependent on the quality of the engine employed. This paper provides an overview of several basic commodity price models and explains the essential differences among them. We also show how futures prices can be used to discriminate among the models and to estimate better key parameters of the model chosen.
The Potential for Use of Modern Asset Pricing Methods for Upstream Petroleum Project Evaluation: Concluding Remarks
Authors: Laughton David G.
Published: May 2011

MAP methods are continually being refined and expanded. In these concluding remarks I would like to touch on some of those developments, and then briefly to mention some steps that might be taken by an organisation that wants to explore this field further.
Customer Retention in a Competitive Power Market: Analysis of a ‘Double-Bounded Plus Follow-ups’ Questionnaire
Authors: Cai Yongxin , Deilami Iraj , Train Kenneth
Published: May 2011

A model is developed and estimated that forecasts the share of an electric utility's customers who would switch to a competitor under various price discounts and service attributes (reliability, renewable power, energy conservation assistance, and customer service.) The method builds upon previous double-bounded dichotomous choice procedures, extended to account for the multi-attribute nature of electric power service.
The Bias in Price Elasticity Estimates Under Separability Between Electricity and Labor in Studies of Time-of-Use Electricity Rates: An Application to Israel
Authors: Tishler Asher
Published: May 2011

Most time-of-use(TOU) studies of electricity use in the business sector have found little overall response, as measured by price elasticities, to TOU rates. These studies employed the assumption of weak separability between electricity and all other inputs. Here, we use the generalized Leontief cost function to show that when labor is included in the estimation, the electricity price elasticities are larger, in absolute values, than when labor is erroneously excluded. This result is demonstrated with data on electricity and labor for about 400 Israeli business customers. We also show that the omission of labor from the estimation may cause serious underestimation of the net welfare gains that result from changing a flat electricity price to a TOU rate.
Electricity Sectors in Transition
Authors: Joskow Paul L.
Published: May 2011

This paper discusses the structural and regulatory changes that are affecting electricity sectors around the world. The direction of change is toward promoting competition in the supply of generation services, restructuring of electricity supply enterprises to clearly separate the provision of competitive generation services from monopoly transmission and distribution services, and the application of new regulations governing access to the transmission and distribution networks and the associated costs of the services provided by these networks. The potential impacts of these changes on electricity costs and prices, economic development, the distribution of income, the choice of generating technologies, research and development and the environment are discussed. Differences in the current performance and the likely future impacts of electricity sector restructuring on developing and developed countries are discussed.
Global Demand Growth of Power Generation, Input Choices and Supply Security
Authors: Matsui Kenichi
Published: May 2011

The anticipated global demand growth for energy, and electricity in particular, is mapped for the coming 20 years. Five critical issues implied by this forecast are then spelled out: uncertainty, security of energy supply, energy financing, and the role of nuclear and renewable energy. Finally, based on a review of the energy revolutions which the human race has experienced during history, the paper sketches a long term energy future. It suggests the possibility of a new energy era in the 21st century with electricity and hydrogen as the main final energy and nuclear and renewables as the main primary energy, providing, coincidentally, a solution to the CO2 issues that loom so importantly at the end of the 20th century.
Increased Competition on the Supply Side of the Western European Natural Gas Market
Authors: Golombek Rolf , Gjelsvik Eystein , Rosendahl Knut Einar
Published: May 2011

This paper analyzes how the supply side of the Western European natural gas market may react if the demand side becomes competitive. We show-using a numerical model of the Western European natural gas market-that once the demand side of the market is liberalized, each gasproducing country has an incentive to break up its gas sellers. The model therefore suggests that there may be numerous producers in a liberalized natural gas market. Hence, in a liberalized market consumers will not be exploited by suppliers.
Simulating the Operation of Markets for Bulk-Power Ancillary Services
Authors: Hirst Eric , Kirby Brendan
Published: May 2011

The U.S. Federal Energy Regulatory Commission (FERC) requires electric utilities to offer six ancillary services. Most of the tariffs filed with FERC price these services on the basis of traditional cost-of-service (embedded) costs, Because most of these services are provided by generating units, however, it should be possible to create competitive markets for them. This paper describes, the structure of, and results from, a spreadsheet model that simulates markets for seven services: losses, regulation, spinning reserve, supplemental reserve, load following, energy imbalance, and voltage support. The model also analyzes, system control, although this service will continue to be provided solely by the system operator under cost-based prices. Developing this computer model demonstrated the likely complexity of markets for energy and ancillary services. This complexity arises because these markets are highly interdependent. For example, the cost of regulation (the frequent change in generator outputs to track the minute-to-minute fluctuations in system load) depends strongly on which units, are already being dispatched to provide energy and losses, their variable costs, and their operating levels relative to their maximum and minimum loading points.
The “Regulatory Compact” and Implicit Contracts: Should Stranded Costs be Recoverable?
Authors: Boyd James
Published: May 2011

Progress toward electricity market deregulation has brought controversy over whether or not utilities are entitled to compensation for "stranded costs", i.e., costs utilities will not be able to recover due to the advent of competition in their markets. This paper uses a legal and economic analysis of contracts to address the desirability of utility cost recovery. First, underlying principles of law are reviewed to determine whether or not there is a legal presumption of recovery. Then, the analysis considers whether or not an implicit "regulatory compact" between utilities and regulators follows from principles in the economic analysis of law, particularly theories of efficient breach and implicit contracts. The paper concludes that recovery should occur in only a proscribed set of circumstances and that, when called for, compensation should be partial, rather than full.
Prices that Clear the Air: Energy Use and Pollution in Chile and Indonesia
Authors: Eskeland Gunnar S. , Jimenez Emmanuel , Liu Lili
Published: May 2011

Emission reductions could be provided by cleaner technologies as well as substitution towards less polluting inputs and goods. We develop a model to assess the scope for emission reductions by input substitution. We then apply the model to manufacturing in Chile and Indonesia-two developing countries considering air pollution control strategies. We estimate substitutability in input demand in manufacturing--using standard techniques-and combine these with emission factors to assess the potential for emission reductions via demand' changes. For sulphur oxides (SO) and suspended particulates (TSP), emission elasticities with respect to the price of heavy fuels range from -0.4 to -1.2. A price increase of 20 percent would reduce emissions of SOx, and TSP by 8 to 24 percent. While these results indicate how emissions can be reduced by presumptive taxes on fuels-clearing the air as well as the markets for energy-such a strategy preferably should be accompanied by other instruments that stimulate cleaner technologies. Similarly, emission standards should be accompanied by presumptive taxes on goods and inputs. Emission taxes, if feasible, optimally combine inducements along both avenues.
At What Cost do We Reduce Pollution? Shadow Prices of SO2, Emissions
Authors: Swinton John R.
Published: May 2011

The U. S. EPA's infant market for SO2 emissions has the potential for improving the cost effectiveness of reducing acid rain pollutants. If the market works as planned, over time one should see the cost of reducing additional amounts of sulfur dioxide converge across plants. The results of the study described here demonstrate that before the market opened marginal abatement costs varied wildly across plants. This work provides estimates of the shadow price of SO2 abatement using the output distance function approach for Illinois, Minnesota and Wisconsin coal-burning electric plants. The results demonstrate that the coal-burning electric plants with the highest emissions rates are also the plants with the lowest marginal abatement costs, a fact that may explain lower-than-expected prices in the new market for allowances. The data include information about plants with installed scrubber capital allowing for an investigation of the effect of scrubber capital on marginal abatement costs.
Simple Analytics of Valuing Producing Petroleum Reserves
Authors: Davis Graham A. , Cairns Robert D.
Published: May 2011

We modify the approach to valuing mineral reserves that is current in economic literature by considering a net present-value rule under uncertainty. Direct application of Hotelling's rule is found to be inappropriate. The modification is such that the present value is approximately half that proposed by the Hotelling Valuation Principle.
the Benefits of an Alaskan Natural Gas Pipeline
Authors: Fried Douglas B. , Hederman William F.
Published: May 2011

The United States, reacting to rising prices and supply uncertainties of imported energy, has begun to move aggressively to develop its untapped domestic energy resources. The Department of Energy has recently awarded funds to support feasibility studies as well as design, engineering, and construction activities for 110 synthetic fuel projects. Despite pressures for budgetary restraint, Congress has steadily increased (in real terms) budgets for research and development for a variety of technologies utilizing solar and geothermal energy. The federal government has leased potentially oil-rich offshore tracts in the Northeast despite strong opposition from the fishing industry and environmental groups. Yet, despite this apparent scramble to exploit domestic energy resources, a variety of factors has delayed construction of the pipeline that would transport natural gas from deposits on Alaska's North Slope to gas markets in the lower 48 states.
Risks and Psychic Costs of Alternative Energy Sources for Generating Electricity
Authors: Spangler Miller B.
Published: May 2011

According to public opinion polls, many people in the United States do not agree that there is truly an energy crisis. President Carter referred to it as an "invisible" crisis in the National Energy Plan of 1977.
Energy Analysis and the Energy Theory of Value
Authors: Alessio Frank J.
Published: May 2011

The concept of energy analysis has attracted much attention during the past few years. The notion that the energy content of goods and services should be closely studied, an idea that originally appealed only to specialists in certain scientific and technical fields, has recently aroused the interest of a wide range of researchers and public policy decisionmakers, particularly since the formation of the OPEC oil cartel.
Joint Energy and Economic Optimization: A Proposition
Authors: Hertzmark Donald I.
Published: May 2011

This article gives some analytical results of an attempt to optimize economic and thermodynamic efficiency simultaneously. The attempt to impose complete mathematical rationality and consistency on the pricing of energy commodities fails. since it is not possible to weigh consistently purely physical efficiency measures. much less social factors. This means that energy or entropy theories of value must suffer the fate of other single-factor theories. such as the labor theory of value. Such a single-factor theory cannot adequately handle such questions as fixed capital, subjective utility. and contradictory constraints on economic choice.
Policy Implications of Energy Vulnerability
Authors: Plummer James L.
Published: May 2011

The research of the Energy Vulnerability Modeling Project has concluded that the oil stockpile premium probably lies in the range of $20 to $40 per barrel, and the oil import reduction premium in the range of $5 to $20 per barrel. ENERGY POLICY VS. OIL POLICY Since the price of oil Btu's is three to four times the price of coal Btu's, energy Btu's are definitely "not created equal." If an oil import reduction premium of $5 to $20 is added on top of the price of domestic oil, the inequality grows much larger.
Aggregate Elasticity of Energy Demand
Authors:   EMF 4 Working Group
Published: May 2011

The first EMF study, "Energy and the Economy," produced estimates of the aggregate elasticity of substitution for primary energy implicit in six models of energy and the economy.' In that study, the working group identified the importance of the aggregate elasticity and called for an examination of more detailed demand models. During its review of the study, the EMF Senior Advisory Panel cited the importance of a careful investigation of energy demand models to clarify estimates of the aggregate elasticity. The present study is a response to those suggestions.
Interfuel Substitution—Upper Bound Estimates
Authors: Sullivan Brian , Siemon Donna
Published: May 2011

The degree to which alternative energy sources can be substituted for each other is an important consideration in several energy policy areas. This article examines the issue of interfuel substitution within a very limited framework, namely, the capability of the steam electric industry to switch among coal, oil, and natural gas in plants able to bum all three fuels. In this sense, we claim that our substitution possibility estimates will be upper bounds, since the necessary capital is already in place to accommodate each fuel. Section II describes the theoretical model used in describing the behavior of steam electric plants. Section III discusses the justification of the empirical technique presented; Section IV discusses this study's data and presents results; Section V discusses the implications of these results.
Multimarket, Multitechnology, Multiattribute Technological Forecasting
Authors: Silverman Barry G.
Published: May 2011

This model was developed to provide a simplified yet systematic approach to the estimation of complex market penetration problems. Specifically, the model permits the decision maker to determine simultaneously the market penetration of several technological innovations, under conditions consisting of (1) multiple market applications for each technological innovation, and (2) numerous competing technologies in each market application. Availability of this type of model is critical in a field such as energy, where an "explosion" of technological ideas into the marketplace appears to be imminent.
The Dilemma of Economic Versus Statistical Models of Energy (and Some Results of Forecasting Monthly Peak Electricity Demand Using a Transfer Function Model)
Authors: Khazzoom J. Daniel
Published: May 2011

The recent surge of interest among energy planners in economic models for predicting the energy outlook has coincided with a growing sense of disillusionment among many practicing econometricians about the forecasting performance of economic models (see, for example, Stekler, 1968). Many economists argue that the problem with economic models lies in the economic theories behind them. These theories analyze the impact of policy changes on the assumption that the structure will not change, when in fact what may happen is that the structure itself, and not just the variables of interest, may change as policy changes. What is needed is a theory that predicts how the structure will change in response to such policy changes.
A Critique of the NASA Energy Models
Authors: Meadows Dennis
Published: May 2011

Of the several hundred seminars and meetings that have been held by the IIASA Energy Systems Program since its inception in 1973, one still stands out in the minds of many people at the Institute. In the winter of 1977, Amory Lovins visited Laxenburg; he was invited to deliver a seminar on soft energy paths and to discuss interim results of the IIASA energy project with Dr. Wolf Hafele, founder and director of the Program and its dominant intellectual and administrative figure since its initiation.
Comment on “Balancing Energy Supply and Demand”
Authors: Foster John
Published: May 2011

While a number of energy studies assume a national or regional perspective, just a few attempt a global approach, and these are typically concerned with the implications for industrialized nations. More-over, very few published studies look at the long-term global scene as far ahead as even the year 2000 (e.g., WAES and Exxon's World Energy Outlook), and only one to my knowledge extends its perspective to 2020 (Conservation Commission of the World Energy Conferences, 1977). So the long-awaited IIASA report, (as summarized here by Paul Basile), represents a landmark.
Information and Bidding Behavior by Major Oil Companies for Outer Continental Shelf Leases: Is the Joint Bidding Ban Justified?
Authors: Millsaps Steven W. , Ott Mack
Published: May 2011

The Energy Policy and Conservation Act (PL 94-163), signed into law in December 1975, forbade oil companies that produced the equivalent of 1.6 million barrels of oil per day (mbd) worldwide from bidding jointly for outer continental shelf (OCS) leases. The U.S. Department of the Interior adopted regulations to that effect. The Outer Continental Shelf Lands Act Amendment of 1978 (PL 95-372) modified the 1975 law. This amendment gives the Secretary of the Interior the power to conduct periodic reviews of production rates by petroleum producers and to ban from joint bidding any person or firm that produced, during a prior six-month period specified by the secretary, an average of 1.6 mbd.
Industrial and Commercial Demand for Electricity by Time-of-Day: A California Case Study
Authors: Chung Chinbang , Aigner Dennis J.
Published: May 2011

Recently there has been much interest in time-of-use (TOU) pricing structures for electric utilities. TOU pricing reflects more closely than conventional pricing the cost components of supplying electricity, which vary over the course of a single day as well as over days of the week and seasons of the year. Although such pricing structures have long been used in Europe, they did not receive much attention in the United States prior to 1974.
Stability of Appalachian Coal Shipments under Policy Variation
Authors: Yang Chin Wei , Labys Walter C.
Published: May 2011

This article investigates the critical issue of how Appalachian coal supply flows vary in response to changes in national coal markets and policies, with emphasis on the relative stability of traditional flows. The approach taken to analyze this stability involves the use of a quadratic programming (QP) transportation model (see Takayama and Judge, 1971), along with a nonparametric statistical procedure (see Gibbons 1976, and Cooper, 1971). This approach is deemed appropriate for several reasons. First, the QP formulation permits the mechanism of price adjustment to become endogenous. Second, the mathematical property of the base-shifting flows under random shocks is almost intractable, confirming the validity of combining the statistical and mathematical programming approaches. Third, coal characteristics that differ among regions, such as sulfur and ash content and degree of washability, permit a comparison of the "relative" positions (ranking of dominance) of 13 major coal trade flows in the Appalachian area.
Oil and Energy Demand in Developing Countries in 1990
Authors: Wolf Charles , Relles Daniel A. , Navarro Jaime
Published: May 2011

How much of the world's oil and energy supply will the non-OPEC less developed countries (NOLDCs) demand in the next decade? Will their requirements be small and thus fairly insignificant compared with world demand, or large and relatively important? How will world demand be affected by the economic growth of the NOLDCs? In the study on which this article is based, we try to develop some reasonable forecasts of NOLDC energy demands in the next 10 years.' Our focus is mainly on the demand for oil, but we also give some attention to the total commercial energy requirements of these countries. We have tried to be explicit about the uncertainties associated with our forecasts, and with the income and price elasticities on which they are based.
Supplemental Sources of Natural Gas: An Economic Comparison
Authors: Kaufman Alvin , Bodilly Susan J.
Published: May 2011

Over the past decade, the United States has become increasingly dependent on imported energy, and there has been an attendant impact on the balance of payments. For example, 43 percent of the oil used in the United States was imported in the first six months of 1979, compared with 35 percent in 1973. Of these 1979 imports, 67 percent was supplied by the OPEC countries, including 40 percent from Arab producers. During the six months preceding the 1973-74 embargo, Arab producers supplied only 15 percent of U.S. imported oil. At the same time, OPEC oil has increased in price, through the machinations of the cartel. The massive income transfer is indicated by the rise in the U.S. oil balance of payments bill, from $3.4 billion in the first six months of 1973 to $24.4 billion during the first six months of 1979.
Financial Transmission Rights Meet Cournot: How TCCs Curb Market Power*
Authors: Stoft Steven
Published: May 2011

This paper reconsiders the problem of market power when generators face a demand curve limited by a transmission constraint. After demonstrating that the problem's importance originates in an inherent ambiguity in Cournot-Nash theory, I review Oren's (1997a) argument that generators in this situation capture all congestion rents. In the one-line case, this argument depends on an untested hypothesis while in the three-line case, the Nash equilibrium was misidentified. Finally, the argument that financial transmission rights (and TCCs in particular) will have zero market value is refuted by modeling the possibility of their purchase by generators. This allows transmission owners, who initially own the TCCs, to capture some of the congestion rent. In fact when total capacity exceeds line capacity by more than the capacity of the largest generator, TCCs should attain their perfectly competitive value, thereby curbing the market power of generators.
Barriers to Energy-Efficiency in Electricity Generation in India
Authors: Khanna Madhu , Zilberman David
Published: May 2011

This paper explores the sources and magnitude of energy-inefficiency in the electricity generating sector in India and its implications for carbon emissions from this sector. An econometric methodology is developed to disaggregate and quantify the contribution of technical and institutional factors to this inefficiency. The analysis demonstrates the potential for institutional and economic policy reforms that provide incentives for the adoption of efficiency-enhancing production practices to reduce carbon emissions while increasing net electricity generation, even with the existing capital equipment.
The Political Economy of Motor-Fuel Taxation
Authors: Goel Rajeev K. , Nelson Michael A.
Published: May 2011

This paper examines the political and economic underpinnings of gasoline tax policy. The theoretical model extends the earlier work of Hettich and Winer (1988) to flush out the effect of a change in the pre-tax price of a taxable activity on the politically optimal tax rate. Using a large cross-sectional sample of U.S. states over 1960-94, the empirical model tests the predictions of the theoretical model within the context of the state tax policy on gasoline. While simultaneously controlling for other politico-economic influences, we find that the influence of changes in gas prices on tax rates is negative. To our knowledge, this is the first study to include a fully developed theoretical model and its empirical application to the gasoline market for a test of the votemaximizing model of tax policy.
The North American Natural Gas Liquids Markets are Chaotic
Authors: Serletis Apostolos , Gogas Periklis
Published: May 2011

In this paper we test for deterministic chaos (i.e., nonlinear deterministic processes which look random) in seven Mont Belview, Texas, hydrocarbon markets, using monthly data from 1985:1 to 1996:12--the markets are those of ethane, propane, normal butane, iso-butane, naptha, crude oil, and natural gas. In doing so, we use the Lyapunov exponent estimator of Nychka, Ellner, Gallant, and McCaffrey (1992). We conclude that there is evidence, consistent with a chaotic nonlinear generation process in all five natural gas liquids markets.
An Integrated Model of Oil Production
Authors: Moroney John R. , Berg M. Douglas
Published: May 2011

This paper demonstrates that models which combine the physical reserves of oil with economic and regulatory variables provide better forecasts of future production than models based on either reserves or economic variables alone. Four alternative models are specified and estimated. Out-of-sample forecasts show that a model combining reserves, lagged production, and the real price of oil performs much better than models based on reserves alone or economic variables alone.
Economic Development and the Structure of the Demand for Commercial Energy
Authors: Judson Ruth A. , Schmalensee Richard , Stoker Thomas M.
Published: May 2011

To deepen understanding of the relation between economic development and energy demand, this study estimates the relations between per-capita GDP5 and per-capita energy consumption in major economic sectors. Panel data covering up to 123 nations are employed, and measurement problems are treated both in dataset construction and in estimation. Time and country fixed effects are assumed, and flexible forms for income effects are employed. There are substantial differences among sectors in the structure of country, time, and income effects. In particular, the household sector's share of aggregate energy consumption tends to fall with income, the share of transportation tends to rise, and the share of industry follows an inverse-U pattern.
Emissions of SO2, NOx, and CO2, in Transition Economies: Emission Inventories and Divisia Index Analysis
Authors: Viguier Laurent
Published: May 2011

This paper analyses SO2, NOx, and CO2 emissions in three Eastern countries (Hungary, Poland and Russia) and in three OECD countries (France, the United Kingdom and the United States) for 1971-1994. The energy balances method is used to evaluate the emissions from major economic sectors. The emphasis is on explaining high levels of per capita emissions in transition economies. The analysis of the environment-economic growth relationship shows high emission intensities compared to OECD countries. A Divisia index approach is used to decompose the change in emission intensities into the effects of four components: emission factors, fuel mix, economic structure, and energy intensity. The main contribution to high emission intensities in transition economies is from the persistence of high energy intensities.