nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒12‒20
eight papers chosen by
Roger Fouquet
Imperial College, UK

  2. China and the Relationship Between the Oil Price and the Dollar By Agnes Benassy-Quere; Valerie Mignon; Alexis Penot
  3. How are Oil Revenues redistributed in an Oil Economy? The case of Kazakhstan By Boris Najman; Richard Pomfret; Gael Raballand; Patricia Sourdin
  4. Technology and Petroleum Exhaustion: Evidence from Two Mega-Oilfields By John M. Gowdy; Roxana Julia
  5. Perfect Competition, Spatial Competition, and Tax Incidence in the Retail Gasoline Market By James Alm; Edward Sennoga; Mark Skidmore
  7. Double informational asymmetry, signaling, and environmental taxes By Manel Antelo
  8. Reconsidering the Environmental Kuznets Curve hypothesis: the trade off between environment and welfare By Nicola Cantore

  1. By: Warwick J. McKibbin
    Date: 2005–12
  2. By: Agnes Benassy-Quere; Valerie Mignon; Alexis Penot
    Abstract: We study cointegration and causality between the real price of oil and the real price of the dollar over the 1974-2004 period. Our results suggest that a 10% rise in the oil price coincides with a 4.3% appreciation of the dollar in the long run, and that the causality runs from oil to the dollar. Through the development of a theoretical model, we then investigate possible reasons why this relationship could be reversed in the future due to the emergence of China as a major player on both the oil and the foreign exchange markets.
    Keywords: Oil price; real exchange rate; dollar; euro; China; cointegration; causality; error correction model; dollar; energy cost; models; foreign exchange markets
    JEL: C22 F31 Q43
    Date: 2005–10
  3. By: Boris Najman (ROSES-CNRS, University of Paris 1, France); Richard Pomfret (University of Adelaide, Australia); Gael Raballand (World Bank, Washington DC, USA); Patricia Sourdin (University of Adelaide, Australia)
    Abstract: Kazakhstan’s economy has been driven by an oilboom since the discovery of large new oilfields coincided with the upturn of world oil prices after 1998. This paper uses national household expenditure survey data to examine whether Kazakhstan’s experience supports a curse or a blessing outcome. We assess the extent to which the benefits from the oilboom are retained in the oil-producing regions, or spread evenly across the national economy, or are concentrated in the cities where the country’s elite lives. We then analyze the data to determine the transmission mechanisms (higher wages, social transfers or informal income) from the oilboom to household expenditure.
    Keywords: resource boom; redistribution
    JEL: D30 Q32 O13
    Date: 2005–12–13
  4. By: John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA); Roxana Julia (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)
    Abstract: . In this paper we use results from the Hotelling model of non-renewable resources to examine the hypothesis that technology may increase petroleum reserves. We present empirical evidence from two well-documented mega-oilfields: the Forties in the North Sea and the Yates in West Texas. Patterns of depletion in these two fields suggest that when a resource is finite, technological improvements do increase supply temporarily. But in these two fields, the effect of new technology was to increase the rate of depletion without altering the fields' ultimate recovery - in line with Hotelling's predictions. Our results imply that temporary low prices may be misleading indicators of future resource scarcity and call into question the future ability of current mega-oilfields to meet a sharp increase in oil demand.
    JEL: O13 Q41
    Date: 2005–12
  5. By: James Alm (Andrew Young School of Policy Studies, Georgia State University); Edward Sennoga (Andrew Young School of Policy Studies, Georgia State University); Mark Skidmore (Department of Economics, University of Wisconsin - Whitewater)
    Abstract: In this paper we use monthly gasoline price data for all fifty U.S. states over the period 1984 to 1999 to examine the incidence of state gasoline excise taxes. Standard economic theory predicts full shifting of the excise tax to consumers when the supply of gasoline is perfectly elastic, and our empirical results are largely consistent with this prediction. In general, we find full shifting of gasoline taxes to the final consumer, with changes in gasoline taxes fully reflected in the tax-inclusive gasoline price almost instantly, a result consistent with a retail gasoline market in which firms are perfectly competitive and produce at constant cost. In addition, although we find that gasoline retail prices demonstrate asymmetric responses to changes in gasoline wholesale prices, we find only limited evidence of such behavior for retail prices with respect to gasoline excise taxes. Importantly, we also present a novel application of a spatial price discrimination model to examine tax incidence in markets that are not perfectly competitive. In this alternative framework, the incidence of excise taxes depends upon the competitiveness of retail gasoline markets, which depends in turn on spatial aspects of the market. Consistent with this alternative theoretical framework, our empirical estimates demonstrate that gasoline markets in urban states exhibit full shifting, but those in rural states demonstrate somewhat less than full shifting.
    Keywords: incidence, spatial competition, asymmetric response
    JEL: H22
    Date: 2005–10
  6. By: Arturo Vasquez Cordano (OSINERG)
    Abstract: This paper tests and confirms the hypothesis that retail and wholesale Diesel 2 prices respond more quickly to increases than to decreases in wholesale and crude oil prices, respectively. Among the possible sources of this asymmetry, we find: production / inventory adjustment lags, refining adjustments, market power of some sellers, searching costs, among others. By analyzing price transmission at different points of the distribution chain, this paper attempts to shed light on these theories for the Peruvian oil industry. Wholesale prices for Diesel 2 show asymmetry in responding to crude oil price changes, which may refl ect inventory adjustment effects. Asymmetry also appears in the response that retail prices give to wholesale price changes, presumably indicating short-run local market power among retailers or the existence of searching costs.
    Keywords: Price-response asymmetry, oil, Diesel 2 prices, impulse response analysis
    JEL: D43 E31 L71
    Date: 2005–12–11
  7. By: Manel Antelo (Universidad de Santiago de Compostela)
    Abstract: This paper examines the effect of signaling on environmental taxation when each polluter privately knows whether its production cost is low or high, whereas third parties (i.e. the rival firms and the regulator) have only a subjective perception on such a cost. Consequently, there is both horizontal and vertical asymmetric information, and each polluting firm can strategically manipulate both the competitor and the policymaker's prior cost perceptions. We show that if the policymaker's ecological conscience is sufficiently high, polluters wish to be perceived as low-cost firms and, to this end, they will produce a high output level and they will emit a high emissions level. Therefore, optimal pollution taxes are higher than would be the case if firms' costs were not signaled in such a manner as to force low-cost polluters, in an attempt to distinguish themselves from high-cost polluters (by increasing their output level and their emissions level), to reduce the distortions in their production and also in their emissions levels. By contrast, if the policymaker values environmental quality less than consumption, environmental taxes become negative (a subsidy per unit of pollutant emitted), but each polluting firm continues to attempt to convince the other players (the rival firm and the regulator) that it is a low-cost supplier. In this case, if the quantity produced by each polluter signals its costs, over-subsiding holds as compared to the benchmark case of non-signaling.
    Keywords: Polluting firms, horizontal and vertical asymmetric information, signaling and non-signaling, environmental taxes
    JEL: D82 L13 Q28
    Date: 2005
  8. By: Nicola Cantore (University of York and Università Cattolica del Sacro Cuore, Milan)
    Abstract: Past climate change literature paid great attention to the welfare analysis of international agreements that stabilize emissions over time on the basis of the New Welfare Economics approach claiming “objective” measures of well-being and excluding interpersonal comparisons. In this paper, by using non New Welfare Economics approaches we show that the involvement of developing countries is not a desirable policy option. The implementation of a “Kyoto for ever” scenario including only developed regions could be recommended because improves both environment and welfare also if it does not generate a turning point in the relationship between income and pollution (PIR). The Environmental Kuznets Curve hypothesis (EKC) implies that a bell shaped PIR would induce policy-makers to pursue economic growth in order to overcome the air pollution issue. This normative prescription crucially focuses on the role played by the existence of a turning point in a context where only two sustainability dimensions are important: the economic and the environmental one. Our analysis shows that when we introduce a welfare analysis, policy implications based only on the turning point existence and consequently on the Environmental Kuznets Curve hypothesis could be misleading. In our study a “win-win” policy as the Kyoto Protocol is recommended because the existence of a turning point could be heavily paid in terms of welfare. However results are sensitive to the choice of the welfare measure.
    Keywords: Environmental Kuznets Curve, climate change, welfare, income distribution.
    JEL: H0 H3 I3
    Date: 2005–12

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