nep-ene New Economics Papers
on Energy Economics
Issue of 2006‒03‒05
eighteen papers chosen by
Roger Fouquet
Imperial College, UK

  1. Oil Price Shocks: Can They Account for the Stagflation in the 1970s? By Ben Hunt
  2. Fiscal Policy and Business Cycles in an Oil-Producing Economy: The Case of Venezuela By Alfredo Baldini
  3. Corporate Social Responsibility in the Angolan Oil Industry By Arne Wiig
  4. Futures Maturity and Hedging Effectiveness - The Case of Oil Futures By Ronald Ripple; Imad Moosa
  5. Trinidad and Tobago: The Energy Boom and Proposals for a Sustainable Fiscal Policy By Saqib Rizavi; Delia Velculescu
  6. Government involvement in liberalised gas markets: A welfare-economic analysis of the Dutch gas-depletion policy By Machiel Mulder; Gijsbert Zwart
  7. NATGAS: a model of the European natural gas market By Machiel Mulder; Gijsbert Zwart
  8. Market failures and government policies in gas markets By Machiel Mulder; Gijsbert Zwart
  9. Implications of Quasi-Fiscal Activities in Ghana By Mali Chivakul; Robert C. York
  10. Negotiated Settlements: The development of economic and legal thinking By Joseph Doucet; Stephen Littlechild
  11. Electricity Internal Market in the European Union: What to do next? By Jean-Michel Glanchant; François Lévêque
  12. Mainstreaming New Renewable Energy Technologies By Karsten Neuhoff; Rick Sellers
  13. A general equilibrium analysis of emission allowances. By Alexandrine Jamin; Antoine Mandel
  14. Banking behavior under uncertainty: Evidence from the US Sulfur Dioxide Emissions Allowance Trading Program By Olivier ROUSSE; Benoît SEVI
  15. Convergence in Carbon Emissions Per Capita By Alison Stegman
  16. The Worst-Case Scenario and Discounting the Very Long Term. By El Hadji Fall
  17. Environmental Innovation, War of Attrition and Investment Grants By Cesare Dosi; Michele Moretto
  18. Political Institutions, Environmental Policy and Growth By Laura Marsiliani; Thomas I Renstrom

  1. By: Ben Hunt
    Keywords: Oil prices , Monetary policy , Oil crisis , Economic models ,
    Date: 2005–12–02
  2. By: Alfredo Baldini
    Keywords: Business cycles , Venezuela, Republica Bolivariana de , Fiscal policy , Oil sector ,
    Date: 2005–12–30
  3. By: Arne Wiig
    Abstract: What are the responsibility of oil companies in resource rich countries? Do they take these responsibilities? Based on a utilitarian perspective and theories of the resource curse, we discuss the oil companies' corporate social responsibility (CSR) when a resource rich country such as Angola lacks accountable public institutions. We also analyse the type of responsibility oil companies take and factors driving corporate social responsibility. From undertaking a survey among oil service fi rms operating in Angola, we have found that, in practice, policy on the corporate social responsibility of oil companies is mainly driven by economic incentives (it is good for business), rather than by ethical considerations.
    Keywords: Oil Corporate social responsibility Ethics Angola
    JEL: M14 L71 D63
    Date: 2005
  4. By: Ronald Ripple (Department of Economics, Macquarie University); Imad Moosa (Department of Economics and Finance, La Trobe University)
    Abstract: This paper examines the effect of the maturity of the futures contact used as the hedging instrument on the effectiveness of futures hedging. For this purpose, daily and monthly data on the WTI crude oil futures and spot prices are used to work out the hedge ratios and the measures of hedging effectiveness resulting from using the near-month contract and those resulting from the use of a more distant (six-month) contract. The results show that futures hedging is more effective when the near-month contract is used. They also reveal that hedge ratios are lower for near-month hedging. Some explanations are presented for these findings.
    Date: 2005–11
  5. By: Saqib Rizavi; Delia Velculescu
    Keywords: Oil revenues , Trinidad and Tobago , Fiscal policy ,
    Date: 2005–10–25
  6. By: Machiel Mulder; Gijsbert Zwart
    Abstract: This report analyses the welfare effects of two major components of the Dutch gas-depletion policy: the offtake guarantee for small-fields gas and the cap on production from the Groningen field. We conclude that the benefits of offtake guarantee currently may outweigh the costs, but a further development of the gas market would reverse this picture. The cost of the offtake guarantee is that it gives operators reduced incentives to respond optimally to short-term changes in market conditions compared to a competitive market. Regarding the cap on Groningen (42.5 bcm per year), we find that this measure is inefficient when the cap is binding, i.e. restricting the production from the Groningen field. The costs of capping Groningen production follow from shifting returns to the future. The benefits of this measures consist of slightly positive effects on small-fields production and positive benefits for security of supply.
    Keywords: gas depletion; gas market; gas policy; competition; cost-benefit analysis
    JEL: L3 L5 L95 Q3 Q4
    Date: 2006–02
  7. By: Machiel Mulder; Gijsbert Zwart
    Abstract: The NATural GAS model is an integrated model of the European wholesale gas market providing long-run projections of supply, transport, storage and consumption patterns in the model region, aggregated in 5-year periods, distinguishing two seasons (winter and summer). Model results include levels of investment in the various branches, output and consumption, depletion of reserves and price levels. The NATGAS model computes long-term effects of policy measures on future gas production and gas prices in Europe. NATGAS is an equilibrium model describing behaviour of gas producers, investors in infrastructure (pipeline, LNG capacity, as well as storage), traders and consumers. NATGAS covers the main European demand regions, including the United Kingdom, Germany, the Netherlands and Italy. Moreover, it covers the main origins of supply on the European market, such as Russia, Norway, Algeria, the Netherlands, the United Kingdom and LNG. In this memorandum, we first discuss the theoretical background as well as the model specifications. Afterwards, we describe the data we used, present some results and assess validity by computing sensitivities and comparing with current developments.
    Keywords: gas market modelling; European gas market; equilibrium model; natural resources
    JEL: C3 C5 Q3 Q4
    Date: 2006–02
  8. By: Machiel Mulder; Gijsbert Zwart
    Abstract: This memorandum analyses the fundamental characteristics of the natural gas market and its consequences for government policies. In the past, the European gas market was dominated by state-owned monopolists but since the start of the liberalisation, privatisation and re-regulation in the early 1990s, the market has fundamentally changed. Nevertheless, governments are still involved in the gas industry, not only in gas exporting countries such as Russia, but also in a country like the Netherlands where the government has imposed a cap on production from the main gas field (Groningen) as well as owns shares in the main wholesale trader (Gasunie Trade & Supply) which has the obligation to accept all gas offered by producers on the small fields. In the main report of this project we present a cost-benefit analysis of the Dutch gas-depletion policy. In this memorandum we explore the natural-gas market more broadly, looking for factors why government intervention may be needed using the welfare-economic approach according to which government intervention should be based on the presence of market failures. After a brief description of the main characteristics of the gas industry, we systematically analyse sources of market failures, such as geopolitical factors, economies of scale and externalities, and finally go into the question which policy options may be chosen to address those market failures.
    Keywords: gas depletion; natural resources; market failures; government policy
    JEL: Q3 Q4 D6 L5
    Date: 2006–02
  9. By: Mali Chivakul; Robert C. York
    Keywords: Fiscal policy , Ghana , Fiscal management , Fiscal reforms , Energy , Public sector , Private sector ,
    Date: 2006–02–02
  10. By: Joseph Doucet; Stephen Littlechild
    Abstract: The Federal Power Commission pioneered the use of negotiated settlements in the early 1960s as a means of coping with an increased workload and backlog. Legal scholars have emphasized the importance of settlements in coping with the regulatory load, and in saving time and money, albeit with some concern about transparency and the treatment of non-unanimous settlements. More recently, however, they suggest that settlements better serve the needs of the parties, allow greater flexibility and innovation, and can achieve results that lie beyond traditional regulatory authority. Recent economic research has indicated the high proportion of regulatory cases dealt with by settlements in the US and Canada and confirmed that settlements are not simply a more efficient way of doing the same thing as regulation. Rather, they involve considerable innovation, notably the introduction of price caps and other incentive mechanisms that otherwise would not have been likely or even possible.
    Keywords: negotiated settlements, regulation, innovation
    JEL: L51 L97 L94 L95
    Date: 2006–03
  11. By: Jean-Michel Glanchant; François Lévêque
    Abstract: Like in the US, the EU “internal electricity market” remains unfinished and its construction can stall, fracturing into “national blocks” separated by permanent “border effects”. This is exactly what this paper seeks to avoid in the expected life of the current European Commission (2005-2009). It identifies the critical factors: national and EU market designs, industry structure and competition policy, deeper regional cooperation between TSOs and Regulators. It suggests 8 priority actions and 12 secondary improvements to sustain the dynamics of the construction of an EU set of open r egional markets with limited “border effects”, and explains the rationale for these recommendations.
    Keywords: European Policy, European Electricity Market, Electricity Market Design, Electricity Regulation
    JEL: L51 L52 L94 Q48
    Date: 2006–03
  12. By: Karsten Neuhoff; Rick Sellers
    Abstract: This paper outlines the benefits, obstacles and options for governments to support international markets for technology development. International markets for new energy technologies offer greater scope, thereby increasing the incentives and opportunities for technology improvements. As the market is supported by more independent governments, the confidence of technology developers and producers that future markets for their products will exist is increasing, thus enabling capital access and inducing R&D investment and exploration of improved production processes. The bigger markets also allow for international competition, thus allowing for the application of the best available technology. The government challenge to induce sufficient RD&D remains and with international markets the benefits and costs of national governments free-riding on international effort needs to be addressed. Finally, we discuss how international co-operation can be used to evolve the energy system in such a way that it can integrate new technologies at minimum cost.
    Keywords: Energy technology, Research and development, Deployment
    JEL: Q42 L94 D92
    Date: 2006–03
  13. By: Alexandrine Jamin (CES-CERMSEM); Antoine Mandel (CES-CERMSEM)
    Abstract: Each Party of the Kyoto Protocol on Climate Change must achieve quantified green-house gases emission reduction. one of the major policy instrument to be used to comply with these commitments is the opening of an emission allowances market. This paper analyzes, in the general equilibrium framework, the effects of the opening of such a market on the economic equilibrium.
    Keywords: General Equilibrium Theory, emission allowances, general pricing rules, sensitivity.
    JEL: D59 Q58
    Date: 2006–01
  14. By: Olivier ROUSSE; Benoît SEVI
    Abstract: The aim of this paper is to examine portfolio management of emission allowances in the US Sulfur Dioxide Emissions Allowance Trading Program, to determine whether utilities have a real motive to bank when risk increases. We test a theoretical model linking the motivation of the firm to accumulate permits in order to prepare itself to face a risky situation in the future. Empirical estimation using data for years 2001 to 2004 provides evidence of a relationship between banking behavior and uncertainty the utility is facing with.
    Keywords: Emissions Trading, Permits Banking, Acid Rain Program Uncertainty, Risk Aversion, Prudence.
    JEL: D81 G11 Q28
    Date: 2006
  15. By: Alison Stegman (Department of Economics, Macquarie University)
    Abstract: In late 2003 and early 2004 the Economic Society of Australia surveyed the Heads of Economics Departments in Australia to determine their views on three main issues: student standards, major factors affecting these standards, and policy implications. This paper describes the main results of the survey, reviews the conduct and value of this kind of survey, and discusses policy implications for economics in universities. Most respondents considered that student standards have declined and that the main causes include lower entry standards, high student-staff ratios, and a declining culture of study. However some respondents argued that standards are multi-dimensional and that people may properly attach different weights to different attributes. Strong processes assuring anonymity to respondents minimized strategic responses, but may not have eliminated them entirely. However, these views are based largely on experience rather than evidence and a major finding of this paper is the need for more evidence on standards and on the factors that influence them. Most respondents favour a decentralised university-based approach to dealing with these issues, contending that centralised accreditation is inappropriate and that market forces would promote quality issues. In the writer's view, externally set and assessed exams as part of university examination procedures would lift standards and send out improved market signals.
    Keywords: Emissions, distribution dynamics, convergence, stochastic kernel
    JEL: C10 C14 Q54
    Date: 2005–05
  16. By: El Hadji Fall (CES-EUREQua)
    Abstract: We propose an ethical viewpoint based on the possibility of the realization of the worst-case scenario in order to reduce future generations risks in terms of discounting. Applied to the question of conservation of a renewable resource, we show that an economy, where the social planner takes into account the possibility that at an uncertain date the discount rate could change to its minimum possible value, could lead to a better conservation of the resource and modify the position of the sacrificed generations. Finally, our model suggests to apply the lowest possible discount rate immediately for long term environmental projects.
    Keywords: Discounting, environment, uncertainty, preservation of natural resources, intergenerational equity.
    JEL: O4 Q2 D80
    Date: 2006–01
  17. By: Cesare Dosi; Michele Moretto
    Abstract: The paper analyses the timing of spontaneous environmental innovation when second-mover advantages, arising from the expectation of declining investment costs, increase the option value of waiting created by investment irreversibility and uncertainty about private payoffs. We then focus on the design of public subsidies aimed at bridging the gap between the spontaneous time of technological change and the socially desirable one. Under network externalities and incomplete information about firms' switching costs, auc- tioning investment grants appears to be a cost-effective way of accelerating pollution abatement, in that it allows targeting grants instead of subsidizing the entire industry indiscriminately
  18. By: Laura Marsiliani (University of Durham); Thomas I Renstrom (University of Durham and CEPR)
    Date: 2005–09–03

This nep-ene issue is ©2006 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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