bluuebunny/crossref_metadata_2025 huggingface dataset:
Why Has the Energy-Output Ratio Fallen in China?
Authors: Garbaccio Richard F. , Ho Mun S. , Jorgenson Dale W.
Published: May 2011

In China, between 1978 and 1995, energy use per unit of GDP fell by 55 percent. There has been considerable debate about the major factors responsible for this dramatic decline in the energy-output ratio. In this paper we use the two most recent input-output tables to decompose the reduction in energy use into technical change and various types of structural change, including changes in the quantity and composition of imports and exports. In performing our analysis we are forced to deal with a number of problems with the relevant Chinese data and introduce some simple adjustments to improve the consistency of the input-output tables. Our main conclusion is that between 1987 and 1992, technical change within sectors accounted for most of the fall in the energyoutput ratio. Structural change actually increased the use of energy. An increase in the import of some energy-intensive products also contributed to the decline in energy intensity.
Decomposition of Aggregate CO2, Emissions in the OECD: 1960-1995
Authors: Sun J. W.
Published: May 2011

This paper analyzes the change of aggregate CO2 emissions in the, OECD from 1960 to 1995 based on a complete decomposition approach. The, study indicates that developed countries have achieved a considerable decrease in their CO2 emissions mainly due to improved energy efficiency and fuel switching. However, some member countries of the OECD have found it difficult to achieve the environmental targets set at Rio de Janeiro in 1992, and should reconsider their energy policies in light of information given at the UN Climate, Change Conference in Kyoto.
The Spanish Gasoline Market: From Ceiling Regulation to Open Market Pricing
Authors: Contin Ignacio , Correlje Aad , Huerta Emilio
Published: May 2011

This paper examines the evolution of the Spanish gasoline market from the abolition of the state oil monopoly (January 1993) to "complete" liberalisation (October 1998). With the restructuring of the Spanish oil sector during the 1980s and early 1990s, a highly concentrated oligopoly emerged in the automotive fuels market. A system of price ceilings replaced the state administered prices in July 1990. Since then, new domestic and foreign operators have entered the market, particularly along the coast, near import terminals. Prices went up and then declined. These developments can be explained by an interplay of factors such as: the gradual decline in co-operation among the Spanish firms; the loss of market share of the largest of these, Repsol; the entry of independent operators and supermarkets; and the impact of the ceiling price system. By mid-1998 this system was abolished as the government considered it an "impediment" to further market liberalisation. However, some crucial barriers to the entry of new suppliers remain.
The Economics of Energy Market Transformation Programs
Authors: Duke Richard , Kammen Daniel M.
Published: May 2011

This paper evaluates three energy-sector market transformation programs: the U.S. Environmental Protection Agency's Green Lights program to promote on-grid efficient lighting; the World Bank Group's new Photovoltaic Market Transformation Initiative; and the federal grain ethanol subsidy. We develop a benefit-cost model that uses experience curves to estimate unit cost reductions as a function of cumulative production. Accounting for dynamic feedback between the demand response and price reductions from production experience raises the benefit-cost ratio (BCR) of the first two programs substantially. The BCR of the ethanol program, however, is approximately zero, illustrating a technology for which subsidization was not justified. Our results support a broader role for market transformation programs to commercialize new environmentally attractive technologies, but the ethanol experience suggests moderately funding a broad portfolio composed of technologies that meet strict selection criteria.
Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs
Authors: Eto Joseph , Kito Suzie , Shown Leslie , Sonnenblick Richard
Published: May 2011

Spending on electricity energy-efficiency programs was responsible for most of the growth (and decline), and almost all of the energy savings from U.S. utility demand-side management (DSM) programs between 1990 and 1998. As a result of restructuring, utilities may never again assume such an important role in promoting electricity energy efficiency. However, as governments consider future domestic policies to promote energy efficiency in response to global environmental commitments, the potential of large-scale energy efficiency programs will likely be discussed. This article presents new information on a critical issue that will surely arise in these discussions: how much does it cost to save energy through programs that use monetary incentives and targeted information to influence individual customer decisions? We present findings from a detailed examination of the complete costs and measured energy savings from the largest commercial sector DSM programs operated by U.S. electric utilities in 1992. We extend the methodological considerations first identified by Joskow and Marron (1992) regarding differences among utility cost accounting conventions and savings evaluation methods. We quantify the impact of missing and incomplete data and, to the extent they can be assessed, demonstrate that our assumptions to address them are conservative in that they err on the side of overstating the apparent cost of saved energy. We find that the programs, as a whole, have saved energy at a cost of 3.2C/kWh. When compared to the cost of the energy they allowed the sponsoring utilities to avoid generating or purchasing (in the absence of these programs), we find that the programs, as a whole, are cost effective.
Regulation of an Electric Power Transmission Company
Authors: Léautier Thomas-Olivier
Published: May 2011

Designing regulatory contracts for the operators of power transmission networks has become a critical policy issue in the United States. In this paper, a regulatory contract is proposed that induces network operators to optimally expand the grid, which is crucial for the emergence of efficient wholesale power markets, while also satisfying the other traditional regulatory objectives. The proposed mechanism is readily implementable, since it builds on a contract currently in place in England and Wales.
Developing Countries' Greenhouse Emissions: Uncertainty and Implications for Participation in the Kyoto Protocol
Authors: Lutter Randall
Published: May 2011

Developing countries can participate in the Kyoto Protocol to limit greenhouse gas emissions by adopting national emissions limits. Such limits could offer economic gains to developing countries, cost savings to industrialized countries, and environmental benefits. They could also address concerns of the U.S. Senate. On the other hand, uncertainty about greenhouse gas emissions in developing countries is so great that emissions limits may impose substantial costs if they turn out to be unexpectedly stringent. To manage risks arising from emissions limits, developing countries should index any emissions limits to variables that predict emissions in the absence of limits. This paper presents such an index—similar to one recently adopted by Argentina—and develops estimates showing that it could lower the risk of economic losses to developing countries from about 40 percent to about 35 percent.
Regulatory Remedies to the Common Pool: The Limits to Oil Field Unitization
Authors: Libecap Gary D. , Smith James L.
Published: May 2011

We examine the potential inability of voluntary unitization to remedy common property losses associated with oil field development. Unlike the traditional literature, we show that if the field contains two (or more) substances that differ in kind (like oil and gas), then it is possible that non-unitized forms of ownership and operation (with conflicted production incentives) may dominate unitized development of the resource. More specifically, it may be impossible to identify any plan of unitized development that is not pareto-dominated by initial endowments or other non-unitized production arrangements which the parties might devise. These results cast the role of the regulatory agency in a new light. Whereas compulsory unitization has tended to be viewed as a uniformly helpful form of outside influence that succeeds by reducing or overcoming the deadweight cost of bargaining, from our perspective it could also be seen as forcing on the parties a "solution" that unavoidably harms one or more of them.
Explaining Cointegration Analysis: Part II
Authors: Hendry David F. , Juselius Katarina
Published: May 2011

We describe the concept of cointegration, its implications in modelling and forecasting, and discuss inference procedures appropriate in integrated-cointegrated vector autoregressive processes (VARs). Particular attention is paid to the properties of VARs, to the modelling of deterministic terms, and to the determination of the number of cointegration vectors. The analysis is illustrated by empirical examples.
The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand
Authors: Gately Dermot , Huntington Hillard G.
Published: May 2011

This paper estimates the effects on energy and oil demand of changes in income and oil prices, for 96 of the world’s largest countries, in per-capita terms. We examine three important issues: the asymmetric effects on demand of increases and decreases in oil prices; the asymmetric effects on demand of increases and decreases in income; and the different speeds of demand adjustment to changes in price and in income. Our main conclusions are the following: (1) OECD demand responds much more to increases in oil prices than to decreases; ignoring this asymmetric price response will bias downward the estimated response to income changes; (2) demand’s response to income decreases in many Non-OECD countries is not necessarily symmetric to its response to income increases; ignoring this asymmetric income response will bias the estimated response to income changes; (3) the speed of demand adjustment is faster to changes in income than to changes in price; ignoring this difference will bias upward the estimated response to income changes. Using correctly specified equations for energy and oil demand, the long-run response in demand for income growth is about 1.0 for Non-OECD Oil Exporters, Income Growers and perhaps all Non-OECD countries, and about 0.55 for OECD countries. These estimates for developing countries are significantly higher than current estimates used by the US Department of Energy. Our estimates for the OECD countries are also higher than those estimated recently by Schmalensee-Stoker-Judson (1998) and Holtz-Eakin and Selden (1995), who ignore the (asymmetric) effects of prices on demand. Higher responses to income changes, of course, will increase projections of energy and oil demand, and of carbon dioxide emissions.
Early Emission Reduction Programs: An Application to C02 Policy
Authors: Parry Ian W.H. , Toman Michael
Published: May 2011

In the wake of the 1997 Kyoto Protocol, which if implemented would oblige industrialized countries to meet targets for greenhouse gases (GHGs) in 2008-2012, there have been several proposals to reduce emissions during the interim period. A concern for early reduction also arises in other policy contexts. This paper uses a series of simple models and numerical illustrations to analyze voluntary early reduction credits for GHGs. We examine several issues that affect the economic performance of these policies, including asymmetric information, learning-by-doing, and fiscal impacts, and we compare their performance with that of an early cap-and-trade program. We find that the economic benefits of early credit programs are likely to be limited, unless these credits can be banked to offset future emissions. Such banking was not allowed under the Kyoto Protocol. An early cap-and-trade program can avoid many of the problems of early credits, provided it does not require excessive abatement.
Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?
Authors: Amundsen Eirik S. , Bergman Lars
Published: May 2011

The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies’ ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. The aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market. The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.
The Curious Role of "Learning" in Climate Policy: Should We Wait for More Data?
Authors: Webster Mort
Published: May 2011

Given the large uncertainties regarding potential damages from climate change and the significant but also uncertain costs of reducing greenhouse emissions, the debate over a policy response is often framed as a choice of acting now or waiting until the uncertainty is reduced. Implicit in the "wait to learn" argument is the notion that the ability to learn in the future necessarily implies that less restrictive policies should be chosen in the near term. I demonstrate in the general case that the ability to learn in the future can lead to either less restrictive or more restrictive policies today. I also show that the initial decision made under uncertainty will be affected by future learning only if the actions taken today change the marginal costs or marginal damages in the future. Results from an intermediate-scale integrated model of climate and economics indicate that the choice of current emissions restrictions is independent of whether or not uncertainty is resolved before future decisions, because, like most models, the cross-period interactions are minimal. With stronger interactions, the effect of learning on initial period decisions can be more important.
Modeling Cournot Competition in an Electricity Market with Transmission Constraints
Authors: Willems Bert
Published: May 2011

This paper studies Cournot competition with two generators who share one transmission line with a limited capacity to supply price-taking consumers. In such a game the network operator needs a rule to allocate transmission capacity. Three rules are studied: all-or-nothing, proportional, and efficient rationing. The first result is that if the network operator taxes the whole congestion rent, the generators strategically change their production quantities, such that the network operator obtains no congestion rent. This gives poor incentives for investment in transmission capacity. The second result is that the network operator can create competition among the generators, which can increase welfare. Marginal nodal congestion pricing, which is optimal under perfect competition, is sub-optimal when generators can set their production quantities freely. It does not generate revenue for the network operator, nor does it increase competition among the generators.
Petroleum Tax Reform Proposals in Norway and Denmark
Authors: Lund Diderik
Published: May 2011

During the past two years similar petroleum tax reforms have been proposed in Norway and Denmark. Both were based on results on neutral taxation derived by Boadway and Bruce (1984) and Fane (1987). In this paper the main features of the proposals are presented, and important problems of implementation are highlighted. Topics for further research are pointed out also. While the risk characteristics of tax deductions caused major disagreements between experts and oil companies, the after-tax cost of capital for risk free cash flows is a question less clearly resolved within the economics literature. Another topic for disagreement is value additivity, disputed by the companies.
The LNG Revolution
Authors: Jensen James T.
Published: May 2011

This paper discusses the influence that the world wide liberalization of the natural gas industry is likely to have on the future development of liquefied natural gas (LNG). The paper examines some of the barriers to the workably competitive commodity model for this complex cross-border trade and speculates about the likely future structure of the industry.

Dialectic - The Hegelian process of change whereby an ... entity (thesis) is transformed into its opposite (antithesis), ... the combination ... resolved in a higher form... (synthesis)

The American Heritage Dictionary
EnronOnline and Informational Efficiency in the U.S. Natural Gas Market
Authors: Murry Donald , Zhu Zhen
Published: May 2011

We investigate the impact of the introduction and exit of EnronOnline on the efficiency of the U.S. natural gas market. In particular, we examine the natural gas market informational efficiencies by investigating the time-series properties of natural gas prices: changes in natural gas price long-term dependency, comovement of the spot and futures prices, and changes in volatility patterns in the futures prices and spot prices at representative trading hubs. We find evidence that the introduction and demise of EOL coincided with the improvement and worsening in the degree of the market informational efficiency.
Environmental Externalities, Market Distortions and the Economics of Renewable Energy Technologies1
Authors: Owen Anthony D.
Published: May 2011

This paper reviews life cycle analyses of alternative energy technologies in terms of both their private and societal costs (that is, inclusive of externalities and net of taxes and subsidies). The economic viability of renewable energy technologies is shown to be heavily dependent upon the removal of market distortions. In other words, the removal of subsidies to fossil fuel-based technologies and the appropriate pricing of these fuels to reflect the environmental damage (local, regional, and global) created by their combustion are essential policy strategies for stimulating the development of renewable energy technologies in the stationary power sector. Policy options designed to “internalize “these externalities are briefly addressed.
Estimating the Volatility of Wholesale Electricity Spot Prices in the US
Authors: Hadsell Lester , Marathe Achla , Shawky Hany A.
Published: May 2011

This paper examines the volatility of wholesale electricity prices for five US markets. Using data covering the period from May 1996 to September 2001, for the California-Oregon Border, Palo Verde, Cinergy, Entergy, and Pennsylvania-New Jersey-Maryland markets, we examine the volatility of electricity wholesale prices over time and across markets. We estimate volatility using a TARCH model to study the differences among markets and the seasonal characteristics of each market. For all markets, we find strong evidence for a downward trend in the ARCH term and a significant negative asymmetric effect over the sample period. We also document important differences among the regional electricity markets not only with respect to wholesale price volatility and seasonal variations, but also with respect to asymmetric properties and persistence of volatility.
Multi-Period VaR-Constrained Portfolio Optimization with Applications to the Electric Power Sector
Authors: Kleindorfer Paul R. , Li Lide
Published: May 2011

This paper considers the optimization of portfolios of real and contractual assets, including derivative instruments, subject to a Value-at-Risk (VaR) constraint, with special emphasis on applications in electric power. The focus is on translating VaR definitions for a longer period of time, say a year, to decisions on shorter periods of time, say a week or a month. Thus, if a VaR constraint is imposed on annual cash flows from a portfolio, translating this annual VaR constraint into appropriate risk management/VaR constraints for daily, weekly or monthly trades within the year must be accomplished. The paper first characterizes the multi-period VaR-constrained portfolio problem in the form Max {E - kV} subject to a set of separable constraints over the decision variables (the level of assets of different instruments contained in the portfolio), where E and V are, respectively, the expected value and variance of multiperiod cashflows from operations covered by the portfolio. Then, assuming the distribution of multi-period cashflows satisfies a certain regularity condition (which is a generalization of the standard Gaussian assumption underlying VaR), we derive computationally efficient methods for solving this problem that take the form of the standard quadratic programming formulations well-known in financial portfolio analysis.
Price Asymmetry In Energy Demand Models: A Proxy for Energy-Saving Technical Change?
Authors: Griffin James M. , Schulman Craig T.
Published: May 2011

It has become fashionable to believe that energy and oil demand respond asymmetrically to price increases and decreases. Unfortunately, the asymmetric price model utilized by Gately and others has the unintended by-product of producing intercept shifts in the demand function purely in response to price volatility. Thus what is in fact energy saving technical change is attributed to price asymmetry. The two become observationally equivalent. Furthermore, the asymmetric price model has the peculiarity of being dependent on the starting point of the data period so that parameter estimates are not robust across different sample periods. We demonstrate empirically using a panel of OECD countries for oil and energy demand that symmetric price responses cannot be rejected after explicitly controlling for energy saving technical change within a fixed effects model.
Transporting Russian Gas to Western Europe — A Simulation Analysis
Authors: Hirschhausen Christian von , Meinhart Berit , Pavel Ferdinand
Published: May 2011

This paper examines the options of transporting Russian gas to Western Europe, an issue that has thus far been dominated by a single transit country, Ukraine, which has recently witnessed substantial political turmoil. The completion of a new transit corridor through Belarus in 1999, the so-called Yamal-Europe pipeline, has modified the situation profoundly. The paper develops a model of different strategies of Russia and Ukraine, and derives the analytical solution for Russian gas exports to Western Europe, prices, and the expected profits for the players; we also calibrate numerical results and perform simulations. It turns out that Ukraine suffers a loss from the market entry of Belarus, Russia’s profits significantly increase, and Russia has an incentive to expand its gas transit capacity through Belarus further. The gas price for West European importers falls in the case of cooperative behavior of Russia and Ukraine, and/or new pipeline construction through Belarus. However, both developments would also imply a higher European import dependence on Russian gas.
The Role of Energy in Productivity Growth: A Controversial Issue?
Authors: Murillo-Zamorano Luis R.
Published: May 2011

The main objective of this paper is to clarify the controversial role of energy in productivity growth. This is done by reconciling conventional approaches to the measurement of aggregated productivity growth with the microeconomic foundations provided by the energy economics and frontier productivity measurement literature. The use of Malmquist productivity indices allows us to broaden previous research by decomposing productivity growth into technological progress and technical efficiency change as well as analysing the relationship between energy and both sources of productivity change. By doing so, our findings are that energy indeed matters and that the consideration of technical efficiency contributes to a better understanding of both the temporal evolution and cross-country variability of aggregated productivity growth.
Global Natural Gas Issues and Challenges: A Commentary
Authors: Foss Michelle Michot
Published: May 2011

Interest in the potential for natural gas to emulate oil as a “global” commodity has grown. While international trade in natural gas in liquefied form has occurred for roughly 40 years, natural gas transactions largely take place in local and regional geographies. Growing demand among large consuming nations relative to global distribution of natural gas resources makes for a compelling story with respect to international, transoceanic trade outlooks. However, natural gas and the natural gas “value chain” are imbued with unique characteristics that require careful consideration by developers, researchers, regulators and policy makers. This article provides an overview and suggests key questions and issues for further research.
Does Oil Price Uncertainty Affect Energy Use?
Authors: Kuper Gerard H. , van Soest Daan P.
Published: May 2011

Theory predicts that the presence of fixed costs implies that the relationship between energy use and energy price changes is asymmetric, as the firm’s output and investment decisions respond differently to energy price increases and decreases. The asymmetry is exacerbated if future energy prices are uncertain, but to date the empirical literature does not explicitly take uncertainty into account. The contribution of this paper is twofold. First, we develop a new measure of energy price uncertainty. Second, we apply this measure to explain energy use in fifteen OECD countries between 1978 and 1996. Our results support the theoretical prediction that energy price uncertainty affects the asymmetry and renders energy-saving technologies less attractive.
Impacts of the European Emissions Trading Scheme Directive and Permit Assignment Methods on the Spanish Electricity Sector
Authors: Linares Pedro , Santos Francisco Javier , Ventosa Mariano , Lapiedra Luis
Published: May 2011

This paper assesses the economic impact of the European Emissions Trading Scheme Directive on the Spanish electricity sector. Although some other studies have been carried out before, our approach uses a more detailed model for the Spanish electricity sector, which provides more realistic results both for the expected price of the carbon allowance and for the evolution of electricity prices, installed power and firms’ revenues in Spain. Results show that the implementation of the Directive will result in a significant increase of electricity prices, and also, due to the Spanish pricing system, in a large increase in the revenues of generating firms, unless the regulator intervenes. Results also show the different implications of different assignment methods. This is especially relevant currently given that most European countries are approving their national assignment plans for 2005-07 and have to revise them for 2008.
Testing for Market Integration Crude Oil, Coal, and Natural Gas
Authors: Bachmeier Lance J. , Griffin James M.
Published: May 2011

Prompted by the contemporaneous spike in coal, oil, and natural gas prices, this paper evaluates the degree of market integration both within and between crude oil, coal, and natural gas markets. Our approach yields parameters that can be readily tested against a priori conjectures. Using daily price data for five very different crude oils, we conclude that the world oil market is a single, highly integrated economic market. On the other hand, coal prices at five trading locations across the United States are cointegrated, but the degree of market integration is much weaker, particularly between Western and Eastern coals. Finally, we show that crude oil, coal, and natural gas markets are only very weakly integrated. Our results indicate that there is not a primary energy market. Despite current price peaks, it is not useful to think of a primary energy market, except in a very long run context.
Electricity Price Volatility and the Marginal Cost of Congestion: An Empirical Study of Peak Hours on the NYISO Market, 2001-2004
Authors: Hadsell Lester , Shawky Hany A.
Published: May 2011

We examine the volatility characteristics of the NYISO Day Ahead and Real Time electricity markets for peak hours from January 2001 to June 2004. GARCH models are used to study the differences in volatility across zones. We find that price volatility is higher but less persistent in the Real Time market than in the Day Ahead market. Furthermore, we document the importance of transmission congestion and empirically estimate its impact on volatility in electricity prices. We also examine the Day Ahead premium and show how it is related to volatility in Real Time prices. The implications for participants in these markets are discussed.
Electricity Transmission Pricing and Performance-based Regulation
Authors: Vogelsang Ingo
Published: May 2011

Performance-based regulation (PBR) is influenced by the Bayesian and non-Bayesian incentive mechanisms. While Bayesian incentives are impractical for direct implementation, the insights from their properties can be combined with practical non-Bayesian mechanisms for application to transmission pricing. This combination suggests an approach based on the distinction between ultra-short, short and long periods. Ultra-short periods are marked by real-time pricing of point-to-point transmission services. Pricing in short periods involves fixed fees and adjustments via price-cap formulas or profit sharing. Productivity-enhancing incentives have to be tempered by long-term commitment considerations, so that profit sharing may dominate pure price caps. Investment incentives require long-term adjustments based on rate-of-return regulation with a “used and useful” criterion.
Expectations and the Evolving World Gas Market
Authors: Brito Dagobert L. , Hartley Peter R.
Published: May 2011

A number of authors have noted that recent changes in the liquefied natural gas (LNG) industry are likely to favor shorter term multilateral trades of LNG relative to long term bilateral and project-specific contracts. We present a model in which expectations of such a change in market structure alter investment behavior in a way that reinforces the original tendency. The result is that the structure of the natural gas market could change quite quickly, as happened previously in the world oil market.
Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect
Authors: Small Kenneth A. , Dender Kurt Van
Published: May 2011

We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a pooled cross section of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and allows the rebound effect to vary with income, urbanization, and the fuel cost of driving. At sample averages of variables, our simultaneous-equations estimates of the short- and long-run rebound effect are 4.5% and 22.2%. But rising real income caused it to diminish substantially over the period, aided by falling fuel prices. With variables at 1997-2001 levels, our estimates are only 2.2% and 10.7%, considerably smaller than values typically assumed for policy analysis. With income and starting fuel efficiency at 1997-2001 levels and fuel prices 58 percent higher, the estimates are still only 3.1% and 15.3%, respectively.
The Supply of Storage for Natural Gas in California
Authors: Uría Rocío , Williams Jeffrey
Published: May 2011

Do natural gas storage decisions in distant California respond to NYMEX futures price spreads? Daily data about flows into and out of storage facilities in California over 2002-2006 and daily spreads on NYMEX are used to investigate whether the net injection profile is consistent with the “supply-of-storage” curve first observed by Working for wheat. Storage decisions in California do seem to be influenced by a price signal that combines the intertemporal spread and the locational basis between California and the Henry Hub, in addition to strong seasonal and weekly cycles that determine net injections to a considerable extent. The timing and magnitude of the price response differ across storage facilities. Regulatory requirements and operational constraints also limit the response to short-lived arbitrage opportunities.
Technical Change Theory and Learning Curves: Patterns of Progress in Electricity Generation Technologies
Authors: Jamasb Tooraj
Published: May 2011

Better understanding of the role of learning in technical progress is important for the development of innovation theory and technology policy. This paper presents a comparative analysis of the effect of learning and technical change in electricity generation technologies. We use simultaneous two-factor learning and diffusion models to estimate the effect of learning by doing and learning by research on technical progress for a range of technologies in four stages of development. We find learning patters broadly in line with the perceived view of technical progress. The results generally show higher learning by research than learning by doing rates. Moreover, we do not find any development stage where learning by doing is stronger than learning by research. We show that simple learning by doing curves overstate the effect of learning in particular for newer technologies. Finally, we find little substitution potential between learning by doing and research for most technologies.
Oil Shocks and Real U.S. Income
Authors: Huntington Hillard G.
Published: May 2011

The analysis explains how previous oil shocks have affected real U.S. income. Real income differs from aggregate economic output (GDP) because it includes the purchasing power losses associated with more expensive imported petroleum. Real income declines immediately during the same quarter as the oil price shock as opposed to the output effects, which are lagged over several quarters. These immediate losses can be significant, reaching as much as 1.7% of the baseline value in the same quarter, for a doubling of crude oil prices. Expanding coverage to include purchasing power losses allows policy analysts to evaluate a range of different policy instruments that can influence oil prices, such as the building and release of the strategic petroleum reserve.
Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand
Authors: Hughes Jonathan E. , Knittel Christopher R. , Sperling Daniel
Published: May 2011

Understanding the sensitivity of gasoline demand to changes in prices and income has important implications for policies related to climate change, optimal taxation and national security. The short-run price and income elasticities of gasoline demand in the United States during the 1970s and 1980s have been studied extensively. However, transportation analysts have hypothesized that behavioral and structural factors over the past several decades have changed the responsiveness of U.S. consumers to changes in gasoline prices. We compare the price and income elasticities of gasoline demand in two periods of similarly high prices from 1975 to 1980 and 2001 to 2006. The short-run price elasticities differ considerably: and range from -0.034 to -0.077 during 2001 to 2006, versus -0.21 to -0.34 for 1975 to 1980. The estimated short-run income elasticities range from 0.21 to 0.75 and when estimated with the same models are not significantly different between the two periods.
The Competitive Effects of Ownership of Financial Transmission Rights in a Deregulated Electricity Industry
Authors: Joung Manho , Baldick Ross , Son You Seok
Published: May 2011

In this paper, we investigate how generators’ ownership of financial transmission rights (FTRs) may influence the effects of the transmission lines on competition. In order for concrete analysis, a simple symmetric market model is introduced and FTRs are modeled in two different forms: FTR options and FTR obligations. This paper shows that introducing FTRs in an appropriate manner may reduce the physical capacity needed for the full benefits of competition. Among the competitive effects of ownership of FTRs, we focus on the effects on two possible pure strategy equilibria: the unconstrained Cournot equilibrium and the passive/aggressive equilibrium. We also analyze an extension of the model: asymmetric markets. Finally, a numerical illustration of applying the analysis is presented.
The Relationship of Natural Gas to Oil Prices
Authors: Hartley Peter R. , Medlock Kenneth B , Rosthal Jennifer E.
Published: May 2011

We investigate the relationship between the prices of natural gas and crude oil, and the factors that cause short run departures from the long run equilibrium price relationship. We find evidence that the link between natural gas and crude oil prices is indirect, acting through competition at the margin between natural gas and residual fuel oil. We also find that technology is critical to the long run relationship between fuel prices, and short run departures from long run equilibrium are influenced by product inventories, weather, other seasonal factors and supply shocks such as hurricanes.
Demand-Side Management and Energy Efficiency Revisited
Authors: Auffhammer Maximilian , Blumstein Carl , Fowlie Meredith
Published: May 2011

The key finding of Loughran and Kulick (2004) is that utilities have been overstating electricity savings and underestimating costs associated with energy efficiency demand-side management (DSM) programs. This claim is based on point estimates of average DSM-related savings and costs implied by an econometric model of residential electricity demand. We first argue that the chosen test statistics bias results in favor of rejecting the null hypothesis that utility-reported savings reflect true values. We also note that utility estimates of average program savings and costs are rejected based on point estimates alone. We use the same data and econometric model to estimate the appropriate test statistics. We then construct nonparametric bootstrap confidence intervals. These intervals are quite large; we fail to reject the average electricity savings and DSM costs reported by utilities. Our results suggest that the evidence for rejecting utility estimates of DSM savings and costs should be re-interpreted.
On Hyperbolic Discounting in Energy Models: An Application to Natural Gas Allocation in Canada
Authors: Rowse John
Published: May 2011

Recent work on time discounting involves hyperbolic discounting, in which the marginal discount rate shrinks over time. This work examines hyperbolic discounting and energy resource allocation utilizing a complex dynamic optimization model of natural gas allocation for British Columbia, Canada. Four hyperbolic and three conventional (constant annual) discount rate paths are considered. Focus is placed on the consequences: of using one hyperbolic discount rate path when another hyperbolic path is appropriate, of using conventional discounting when hyperbolic discounting is appropriate, and of using hyperbolic discounting when conventional discounting is appropriate. The generality and implications of the findings are also considered.
The Future of Retail Energy Markets
Authors: Price Catherine Waddams
Published: May 2011

Britain was one of the first countries to introduce competition to retail energy markets in 1998; after a decade of choice, around half of its residential consumers have switched supplier. This paper presents evidence on consumer and supplier behaviour over the decade since the markets were opened to assess the success of the ‘experience’ to date. The early debate about the value of extending choice to householders, in which David Newbery was amongst those who expressed doubts, remains to be resolved in an era of rising costs and increasing politicisation. “While Britain has coped very well with wholesale market power, ending the domestic franchise and removing regulation from the retail supply margin has exposed households to considerable increases in those margins, as switching costs appear significant, and vertically integrated companies have been effective in exploiting their power.” David Newbery, Market Design, EPRG working paper 0515 p.9, 2005
Estimation of Energy Demand: The Developing Countries
Authors: Dunkerley Joy
Published: May 2011

The estimation of energy demand, including conservation possibilities, is now widely recognized as a topic of major importance in both industrial and developing countries. Recent rises in oil prices and the possibility of both long- and short-term supply disruptions or shortages have focused the attention of energy planners throughout the world on how much energy might be consumed in the future, and to what extent energy consumption is sensitive to different kinds of conservation measures.
The Potential Role of Natural Gas in a Major Oil Crisis
Authors: Sehlesinger Benjamin , Hay Nelson E. , Mitchell Jacquelyn S.
Published: May 2011

Most energy experts in the federal government involved with contingency planning concern themselves with what to do when or if "the balloon goes up"; i.e., after the nation's 6-million-barrel-per-day oil supply is substantially cut off.
Oil and Ideology in the United States Senate
Authors: Kalt Joseph P.
Published: May 2011

The last decade has brought dramatic changes in U.S. energy policy. These changes provide fertile ground for research. Perhaps nowhere is this more true than in the petroleum sector, where develop- ments since the Arab oil embargo of 1973 have been accompanied by major alterations in the direction and scope of federal involvement. The ready availability of both relevant data and tried-and-tested methodologies facilitates scholarly investigation of the effects of post-embargo federal petroleum policy. To be sure, the opportunities for these investigations are not being passed up.
European Reliance on Soviet Gas Exports: The Yamburg-Urengoi Natural Gas Project
Authors: Greer Boyce I. , Russell Jeremy L.
Published: May 2011

Editor's Note: The proposal to construct a giant pipeline to transmit natural gas from the Soviet Union to Western Europe has received wide attention on both sides of the Atlantic. Its implications extend into all aspects of East-West relations, including security and economic effects on both the Soviet Union and the gas-importing countries. This article focuses on one main area of concern raised by the pipeline, dependence by Western Europe on Soviet gas. Given the controversial nature of the subject, we are especially interested in comments from our readers.
Costs and Benefits of Residential Time-of-Use Metering
Authors: Huettner David , Kasulis Jack , Dikeman Neil
Published: May 2011

During the past few years interest in time-of-day (TOD) pricing has grown in the electric utility industry. Federal regulations, par- ticularly the Public Utility Regulatory Policy Act (PURPA), plant licensing problems, and the extremely high cost of new utility plants along with regulatory commission unwillingness to pass on higher costs to consumers have all played a part in this process. As the results of various TOD experiments have become available, interest has naturally turned to assessing costs and benefits.
Testing the joint Billing Effect Hypothesis
Authors: Keane Dennis M. , Aigner Dennis J.
Published: May 2011

With the recent national emphasis on energy conservation, greater attention has been focused on the ability of natural gas and electric utilities to induce customers to alter their consumption habits through pricing policies. As a consequence, a great deal of research has been done recently aimed to measure residential households' consumption responses to changes in energy prices. One of the important unresolved issues arising from this research concerns the possible existence of a subset of households that, because of the way they purchase their energy inputs, behave differently from other households.
Oil Sands Royalties and Taxes in Alberta: An Assessment of Key Developments since the mid-1990s
Authors: Plourde Andre
Published: May 2011

This paper examines oil sands royalty and tax systems that have either been proposed or implemented since the mid-1990s. Simulation models of oil sands production projects are constructed and the distribution of ex ante economic rents for various assumed crude oil price paths is calculated. The results suggest that until 2007 changes in royalties and taxes had been favorable to producers. The pattern of estimated real internal rates of return obtained through the simulations supports this conclusion. The recommendations of the provincially appointed Royalty Review Panel were anchored in the view that Alberta’s oil sands industry had matured since the mid-1990s and that a distribution of ex ante rents more favorable to Albertans, as owners of the resource, was thus warranted. In contrast, the changes proposed by the Government of Alberta in 2007 would effectively return the distribution of ex ante rents to what prevailed a decade earlier. However, the role of royalties (as opposed to corporate income tax) as means of capturing rents for governments is more important under the proposals made in 2007.
Natural Gas Across Country Borders: An Introduction and Overview
Authors: Huntington Hillard G.
Published: May 2011

In the last several years, market forces and institutions have transformed international natural gas markets in fundamental ways. Natural gas today is relatively easy to transport over water, and an increasing volume of purchases flow through the spot market. As trade grows, regional prices start to move with each other. Although one does not need formal modeling to describe these new developments, it is also evident that the modeling process improves our basic understanding of how these trends reshape the natural gas outlook.
Modeling the Growth in Gas Reserves From Known Fields
Authors: Forbes Kevin F. , Zampelli Ernest M.
Published: May 2011

The extent to which future United States demand for natural gas is satisfied by imports of LNG is contingent on the adequacy and cost competitiveness of North American supplies. One of the cheaper and more important sources of natural gas supply is accounted for by reserve appreciation, i.e., reserve growth, in known fields. Based on an extensively applied methodology developed by Arrington (1960), the increase in proved ultimate recovery is presumed to increase at a diminishing rate with the age of the field. In this paper, a single equation model of natural gas reserve growth in the Gulf of Mexico is developed and estimated. The results strongly suggest that the annual growth rate in the reserves of a field is significantly affected by initial discovery size, price, water depth, and unobserved field-specific effects. Hence, estimating oil and gas reserve growth using an Arrington based approach may underestimate the response of reserve growth to changes in economic fundamentals.
The Impact of High Oil Prices on Global and Regional Natural Gas and LNG Markets
Authors: Barden Justine , Pepper William , Aggarwal Vineet
Published: May 2011

Oil prices are notoriously hard to predict, but they are an important input in many energy and economic models. This paper explores the effects of different oil price assumptions on natural gas markets (production, consumption, prices in different regions) in the International Natural Gas Model (INGM). Three cases from the INGM are presented: a reference case, a high oil price case and a second high oil price case, where gas-to-liquids (GTL) capacity additions are constrained. The results show that regardless of constraints on GTL capacity additions, higher oil prices lead to higher production and consumption of natural gas. However, when GTL capacity is allowed to expand, higher oil prices generally lead to higher natural gas prices and to less gas consumption in the electric power and industrial sectors as they switch to cheaper fuels and more natural gas is diverted to the production of GTLs.