nep-ene New Economics Papers
on Energy Economics
Issue of 2008‒12‒21
eight papers chosen by
Roger Fouquet
Imperial College, UK

  1. Oil Shocks: How Destabilizing are they? By Bhattacharya, Jyotirmoy
  2. A Resource Belief-Curse? Oil and Individualism By Rafael Di Tella; Juan Dubra; Robert MacCulloch
  3. Mineral Extraction in Bangladesh: Some Fundamental Reform Suggestions By Bernhard G. Gunter
  4. Gas industry reforms and consumers' prices in the European Union: An Empirical Analysis By Rinaldo Brau; Raffaele Doronzo; Carlo V. Fiorio; Massimo Florio
  5. The 30-Year Challenge: Agriculture's Strategic Role in Feeding and Fueling a Growing World By Thompson, Wyatt
  6. The Economics of Climate Change Impacts and Policy Benefits at City Scale: A Conceptual Framework By Stéphane Hallegatte; Fanny Henriet; Jan Corfee-Morlot
  7. Climate Change and Modelling of Extreme Temperatures in Switzerland By Boriss Siliverstovs; Rainald Ötsch; Claudia Kemfert; Carlo Jaeger; Armin Haas; Hans Kremers
  8. Benchmark forecasts for climate change By Green, Kesten C; Armstrong, J Scott; Soon, Willie

  1. By: Bhattacharya, Jyotirmoy
    Abstract: This note examines Prabhat Patnaik's argument that the contemporary international financial system crucially requires the stability of oil prices in terms of the dollar. By comparing the macroeconomic impact of recent oil shocks to those of the 1970s, it argues that sharp changes in the dollar price of oil need not necessarily lead to instability.
    Keywords: oil price; inflation; recession; dollar
    JEL: E31 E52
    Date: 2008
  2. By: Rafael Di Tella; Juan Dubra; Robert MacCulloch
    Abstract: We study the correlation between a belief concerning individualism and a measure of luck in the US during the period 1983-2004. The measure of beliefs is the answer to a question related to whether the poor should be helped by the government or if they should help themselves, while the measure of luck is the share of the oil industry in the state's economy multiplied by the price of oil. The correlation is negative, suggesting that more reliance on luck is correlated with less individualism. We provide three short models that help interpret this correlation. One implication of this finding is that societies that depend heavily on oil, and perhaps natural resources more generally, will experience a heavier demand for government intervention. We argue that if a government cares about the impact of its natural resource policies on the demand of government intervention more generally, it should take this effect into account.
    JEL: E62 P16
    Date: 2008–12
  3. By: Bernhard G. Gunter (Bangladesh Development Research Center (BDRC))
    Abstract: This paper proposes some fundamental reforms of the way the extraction of minerals are managed in Bangladesh. It suggests a Mineral Management Initiative that consists of three components: (i) the creation of Mineral Oversight Committee, (ii) the establishment of a Mineral Revenue Program, and (iii) a comprehensive Mineral Capacity Building Program. The purpose of the Mineral Oversight Committee (MOC) would be to oversee all decisions of Petrobangla’s Board of Directors as well as to monitor all major transactions of Petrobangla, including especially the use of mineral revenues and royalties. The establishment of a Mineral Revenue Program (MRP) is proposed to ensure that the revenues and royalties from the extraction of Bangladesh’s minerals will accrue to all the people of Bangladesh, while a comprehensive Mineral Capacity Building Program (MCBP) would provide specialized resource and management training.
    Keywords: Bangladesh, mineral extraction, natural gas, oil, management
    Date: 2008–12
  4. By: Rinaldo Brau; Raffaele Doronzo; Carlo V. Fiorio; Massimo Florio
    Abstract: The paper offers an exploratory empirical analysis of the impact on consumers’ welfare of the reforms of the gas industry in EU-15 area. After considering the key features of the natural gas industry and of its reform in selected countries, we study the relationship between regulatory reform indicators and price dynamics by means of panel data techniques. We find that none of the relationships between price dynamics and regulatory reform indicators is robust to different econometric specifications. Our findings suggest that until now there is limited evidence of beneficial effects of a standard package gas industry reforms for the European consumers. Country specific factors and price inertia seem to be more important than the reforms as determinants of consumers’ prices.
    Keywords: Natural gas industry, privatization, liberalization, regulatory reform.
    JEL: L32 L33 L95
    Date: 2008
  5. By: Thompson, Wyatt
    Abstract: To develop this report, Farm Foundation drew on the insights of leaders from business, government, non-governmental organizations and academia. We began with a small group of individuals whose discussions defined the 30-year challenge in six broad categories: 1. global financial markets and recession, 2. global food security, 3. global energy security, 4. climate change, 5. competition for natural resources, and 6. global economic development. Farm Foundation then invited a broader group of leaders to explore each of the six categories, identifying critical strategic problems, alternative strategies and potential policies. Those discussions are the basis of this report. The topics and options presented here are not intended to be inclusive; rather they are a template from which to expand discussion and debate. This is not a consensus document and it does not make recommendations. It does reflect the diverse opinions expressed by project participants, their analysis of the problems which must solved to meet the 30-year challenge, and their assessment of some potential options to deal with those problems.
    Keywords: Agricultural and Food Policy, Agricultural Finance, Environmental Economics and Policy, Food Security and Poverty, International Development, Resource /Energy Economics and Policy,
    Date: 2008–12
  6. By: Stéphane Hallegatte; Fanny Henriet; Jan Corfee-Morlot
    Abstract: Climate change has become a priority issue in global environmental governance and cities are important players. For over three decades, the OECD has been actively supporting member and non-member countries to design environmental policies that are both economically efficient and effective at achieving their environmental objectives.1 Through peer reviews of policy implementation, the OECD helps governments to improve their collective and individual environmental performance, through sound economic and policy analysis and dialogue on how to establish and to achieve climate change goals. Climate change has been on the agenda since the late 1980s at the OECD, where we provide a forum for countries to, discuss and develop a shared understanding of the key policy challenges as well as to assess performance and identify good practice in the design and implementation of climate policies. Today the OECD is actively working with governments to highlight the role of cities to deliver cost-effective policy responses to climate change. A number of projects at the OECD are advancing the understanding of the roles that cities can play to respond to efficiently and effectively to climate change. This report is one in a series under the OECD Environment Directorate’s project on Cities and Climate Change. The project aims to explore the city-scale risks of climate change and the local benefits of both adaptation policies and (global) mitigation strategies.
    Keywords: sustainable development, government policy, climate change, global warming, natural disasters, regional economics, General Macroeconomics, Regional, Urban and rural Analyses
    JEL: Q01 Q51 Q54 Q56 Q58 R00
    Date: 2008–12–10
  7. By: Boriss Siliverstovs; Rainald Ötsch; Claudia Kemfert; Carlo Jaeger; Armin Haas; Hans Kremers
    Abstract: This study models maximum temperatures in Switzerland monitored in twelve locations using the Generalised Extreme Value (GEV) distribution. The parameters of the GEV distribution are determined within a Bayesian framework. We find that the parameters of the underlying distribution underwent a substantial change in the beginning of the 1980s. This change is characterised by an increase both in the level and the variability. We assess the likelihood of a heat wave of the Summer of 2003 using the fitted GEV distribution by accounting for the presence of a structural break. The estimation results do suggest that the heat wave of 2003 appears not that statistically improbable event as it is generally accepted in the relevant literature.
    Keywords: Climate change, GEV, Bayesian modelling, Great Alpine Heat Wave
    JEL: Q54 C11
    Date: 2008
  8. By: Green, Kesten C; Armstrong, J Scott; Soon, Willie
    Abstract: We assessed three important criteria of forecastability—simplicity, certainty, and variability. Climate is complex due to many causal variables and their variable interactions. There is uncertainty about causes, effects, and data. Using evidence-based (scientific) forecasting principles, we determined that a naïve “no change” extrapolation method was the appropriate benchmark. To be useful to policy makers, a proposed forecasting method would have to provide forecasts that were substantially more accurate than the benchmark. We calculated benchmark forecasts against the UK Met Office Hadley Centre’s annual average thermometer data from 1850 through 2007. For 20- and 50-year horizons the mean absolute errors were 0.18°C and 0.24°C. The accuracy of forecasts from our naïve model is such that even perfect forecasts would be unlikely to help policy makers. We nevertheless evaluated the Intergovernmental Panel on Climate Change’s 1992 forecast of 0.03°C-per-year temperature increases. The small sample of errors from ex ante forecasts for 1992 through 2008 was practically indistinguishable from the naïve benchmark errors. To get a larger sample and evidence on longer horizons we backcast successively from 1974 to 1850. Averaged over all horizons, IPCC errors were more than seven-times greater than errors from the benchmark. Relative errors were larger for longer backcast horizons.
    Keywords: backcasting; climate model; decision making; ex ante forecasts; out-of-sample errors; predictability; public policy; relative absolute errors; unconditional forecasts
    JEL: C53 O2 Q54
    Date: 2008–12–12

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