No Slide TitleSetting the Stage
Energy resources and industries have been considered strategic and/or national
Energy industries have been vertically integrated
But, there is now deregulation / restructuring
Fossil fuels have been the major source for generating energy, but
These resources are increasingly concentrated in politically sensitive parts of the world
Burning of these fuels are increasingly blamed for a variety of environmental problems
UHCBA Energy Institute *
State of the World
So, how do you address environmental concerns in a more competitive industry?
Fossil fuels-based technologies have cost advantages to “clean” alternatives
Developing economies want to use these technologies and their fossil resources
Developed economies do not want to risk slow-down with heavy regulation
UHCBA Energy Institute *
Energy and GDP
Quads of Btu
1996
Country
GDP
Energy
E/GDp
Uganda
11532
0.021333588
1.8499469265
Nepal
4664
0.0281081292
6.026614319
Ethiopia
8263
0.0453733646
5.4911490509
Tanzania
5373
0.0507241692
9.4405675035
Correlation
Nicaragua
3819
0.0526718066
13.7920415244
0.8904195337
Gabon
4909
0.0542214281
11.0453102759
Honduras
5543
0.0729004842
13.1518102414
Cameroon
8751
0.0831218971
9.4985598322
Iceland
5989
0.0920448826
15.3689902541
5600800
93.3556
16.6682616769
375.0686242418
&C&"MS Sans Serif,Bold"Table B2 World Gross Domestic Product at Market Exchange Rates, 1980-1996&"MS Sans Serif,Regular" (Millions of 1987 U.S. Dollars)
&LSource: Energy Information Administration, International Energy Database, February 1998.&CPage &P
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
5-Japan
1-Uganda
12-France
15-Germany
22-UK
29-Bangladesh
39-US
67-Canada
70-India
73-Mexico
1996
Country
GDP
Energy
E/GDP
Uganda
11532
0.021333588
1.8499469265
Ethiopia
8263
0.0453733646
5.4911490509
Nepal
4664
0.0281081292
6.026614319
Switzerland
186404
1.2137396815
6.51133925
Correl(all)
Japan
3136421
21.3744897672
6.8149300643
0.8904195337
Denmark
120499
0.9121519874
7.5697888563
34098
2.3408536296
68.6507604426
Romania
28918
2.1016396445
72.675829744
Lithuania
4343
0.3542721468
81.5731399517
Qatar
6695
0.5845882957
87.3171464754
Russia
235126
25.9791574707
110.4903646159
Ukraine
47780
6.2484539499
130.7755117189
Uzbekistan
14014
1.8568554495
132.500032072
Kazakhstan
13893
2.0674146239
148.8098052192
375.0686242418
&C&"MS Sans Serif,Bold"Table B2 World Gross Domestic Product at Market Exchange Rates, 1980-1996&"MS Sans Serif,Regular" (Millions of 1987 U.S. Dollars)
&LSource: Energy Information Administration, International Energy Database, February 1998.&CPage &P
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
1996
Country
GDP
Energy
E/GDP
Uganda
11532
0.02
1.85
Nepal
4664
0.03
6.03
Ethiopia
8263
0.05
5.49
Tanzania
5373
0.05
9.44
Correl(all)
Nicaragua
3819
0.05
13.79
0.8904195337
Gabon
4909
0.05
11.05
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
1996
Country
GDP
Energy
E/GDP
Uganda
11532
0.02
1.85
Nepal
4664
0.03
6.03
Ethiopia
8263
0.05
5.49
Tanzania
5373
0.05
9.44
Correl(all)
Nicaragua
3819
0.05
13.79
0.8904195337
Gabon
4909
0.05
11.05
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
Quads of Btu
1996
Country
GDP
Energy
E/GDp
Uganda
11532
0.021333588
1.8499469265
Nepal
4664
0.0281081292
6.026614319
Ethiopia
8263
0.0453733646
5.4911490509
Tanzania
5373
0.0507241692
9.4405675035
Correlation
Nicaragua
3819
0.0526718066
13.7920415244
0.8904195337
Gabon
4909
0.0542214281
11.0453102759
Honduras
5543
0.0729004842
13.1518102414
Cameroon
8751
0.0831218971
9.4985598322
Iceland
5989
0.0920448826
15.3689902541
5600800
93.3556
16.6682616769
375.0686242418
&C&"MS Sans Serif,Bold"Table B2 World Gross Domestic Product at Market Exchange Rates, 1980-1996&"MS Sans Serif,Regular" (Millions of 1987 U.S. Dollars)
&LSource: Energy Information Administration, International Energy Database, February 1998.&CPage &P
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
Quads of Btu
1996
Country
GDP
Energy
E/GDp
Uganda
11532
0.021333588
1.8499469265
Nepal
4664
0.0281081292
6.026614319
Ethiopia
8263
0.0453733646
5.4911490509
Tanzania
5373
0.0507241692
9.4405675035
Correlation
Nicaragua
3819
0.0526718066
13.7920415244
0.8904195337
Gabon
4909
0.0542214281
11.0453102759
Honduras
5543
0.0729004842
13.1518102414
Cameroon
8751
0.0831218971
9.4985598322
Iceland
5989
0.0920448826
15.3689902541
5600800
93.3556
16.6682616769
375.0686242418
&C&"MS Sans Serif,Bold"Table B2 World Gross Domestic Product at Market Exchange Rates, 1980-1996&"MS Sans Serif,Regular" (Millions of 1987 U.S. Dollars)
&LSource: Energy Information Administration, International Energy Database, February 1998.&CPage &P
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
Quads of Btu
1996
Country
GDP
Energy
E/GDp
Uganda
11532
0.021333588
1.8499469265
Nepal
4664
0.0281081292
6.026614319
Ethiopia
8263
0.0453733646
5.4911490509
Tanzania
5373
0.0507241692
9.4405675035
Correlation
Nicaragua
3819
0.0526718066
13.7920415244
0.8904195337
Gabon
4909
0.0542214281
11.0453102759
Honduras
5543
0.0729004842
13.1518102414
Cameroon
8751
0.0831218971
9.4985598322
Iceland
5989
0.0920448826
15.3689902541
5600800
93.3556
16.6682616769
375.0686242418
&C&"MS Sans Serif,Bold"Table B2 World Gross Domestic Product at Market Exchange Rates, 1980-1996&"MS Sans Serif,Regular" (Millions of 1987 U.S. Dollars)
&LSource: Energy Information Administration, International Energy Database, February 1998.&CPage &P
GDPMEX_S
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
GDP in millions of 1987 US$
Quads of Btu
&C&"MS Sans Serif,Bold"&18Energy Consumption per dollar of GDP (billions of Btu)
UHCBA Energy Institute *
Energy Today (primary)
UHCBA Energy Institute *
Natural Resource Economics
Instead of competitive profit max rule of P=MC, we have P=MC+OC
AB = user cost (Hotelling rent)

UHCBA Energy Institute *
Natural Resource Economics
The behavior of this rent over time is important: a barrel of oil not produced today will be worth something tomorrow.
What is, then, the profit maximizing resource extraction pattern?
Output will be decreasing over time as the price increases over time.
Hotelling rule: the rent will increase at the rate of interest (discount rate)
UHCBA Energy Institute *
Natural Resource Economics
DOE PRICE FORECASTS
Appendix B-3.
0.0296511463
-0.0652097286
0.03
0.0173219869
0.5665609353
0.03
0.0323823095
0.3415829827
0.03
0.04284109
-0.1561598993
0.03
0.0121595217
-0.1161665589
0.03
0.0453943733
-0.0467021406
0.03
0.0296664089
-0.096024448
0.03
0.0105917512
-0.4939309312
0.03
0.0601346458
0.1932668516
0.03
0.041591745
-0.2093810559
0.03
0.0551642247
0.2108211327
0.03
0.0356022963
0.1991765026
0.03
0.0216083398
-0.2051082255
0.03
%INCRFREACT$
1979
1979
1979
1979
1980
1980
1980
1981
1981
1981
1982
1982
1982
1983
1983
1983
1984
1984
1984
1985
1985
1985
1986
1986
1986
1987
1987
1987
1988
1988
1988
1989
1989
1989
1990
1990
1990
1991
1991
1991
1992
1992
1992
1993
1993
1993
1994
1994
1994
&A
0.0296511463
0.03
0.0239164658
23.4484543511
0.0173219869
0.03
36.7334325788
0.0323823095
0.03
49.2809480426
0.04284109
0.03
41.58524016
0.0121595217
0.03
36.7544259095
0.0453943733
0.03
35.0379155432
0.0296664089
0.03
31.6734190442
0.0105917512
0.03
16.0289376801
0.0601346458
0.03
19.1268
0.041591745
0.03
15.1220104204
0.0551642247
0.03
18.3100497862
0.0356022963
0.03
21.9569814651
0.0216083398
0.03
17.4534239592
0.031876741
0.03
16.3993228737
0.0239164658
0.03
14.25
0.0163044297
0.03
12.9163495769
7882IN90$
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Actual
1979
1982
1987
1990
1992$/b
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8285IN90$
1979
1979
1979
1980
1980
1980
1981
1981
1981
1982
1982
1982
1983
1983
1983
1984
1984
1984
1985
1985
1985
1986
1986
1986
1987
1987
1987
1988
1988
1988
1989
1989
1989
1990
1990
1990
1991
1991
1991
1992
1992
1992
1993
1993
1993
&A
0.0296511463
0.03
23.4484543511
0.0173219869
0.03
36.7334325788
0.0323823095
0.03
49.2809480426
0.04284109
0.03
41.58524016
0.0121595217
0.03
36.7544259095
0.0453943733
0.03
35.0379155432
0.0296664089
0.03
31.6734190442
0.0105917512
0.03
16.0289376801
0.0601346458
0.03
19.1268
0.041591745
0.03
15.1220104204
0.0551642247
0.03
18.3100497862
0.0356022963
0.03
21.9569814651
0.0216083398
0.03
17.4534239592
0.031876741
0.03
16.3993228737
0.0239164658
0.03
14.25
8290FORE
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
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1979
1979
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1979
1979
1980
1980
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1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
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1982
1982
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1983
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1989
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1989
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1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1992
1992
1992
1992
1993
1993
1993
1993
1994
1994
1994
1994
1995
1995
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
&A
27.7
28.07
28.37
26.52
28.2076705953
26.329614198
36.23
28.2076705953
27.6184764315
51.96
28.2076705953
27.6184764315
51.5849422813
52.4305970728
51.79
28.2076705953
27.6184764315
51.9232041979
54.4601685724
52.4302023682
44.08
28.2076705953
27.6184764315
52.3629446895
56.489740072
52.1199644843
37.06
28.2076705953
27.6184764315
52.8026851811
58.5193115716
51.8097266005
35.24
28.2076705953
27.6184764315
53.2424256727
60.5488830712
51.4994887167
31.98
28.2076705953
27.6184764315
54.1219066558
62.5784545708
51.1892508328
16.17
28.2076705953
28.9073386649
55.8132162388
63.9315022372
56.1530569742
20.29
28.2076705953
30.1962008984
57.5045258218
65.2845499036
61.1168631155
15.77
28.2076705953
31.4850631319
59.1958354048
66.63759757
66.0806692569
18.81
28.2076705953
32.7739253653
60.8871449878
67.9906452364
71.0444753983
20.03
28.2076705953
34.0627875988
62.5784545708
69.3436929028
76.0082815396
18.1553398058
35.9040193609
63.9315022372
72.3880501522
81.5925634487
37.745251123
65.2845499036
75.4324074016
87.1768453577
39.5864828851
66.63759757
78.476764651
92.7611272667
41.4277146472
67.9906452364
81.5211219004
98.3454091758
43.2689464093
69.3436929028
84.5654791498
103.9296910848
70.020216736
106.4115941555
70.6967405692
108.8934972262
71.3732644024
111.3754002969
72.0497882356
113.8573033675
72.7263120688
116.3392064382
8292
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
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1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1992
1992
1992
1992
1993
1993
1993
1993
1994
1994
1994
1994
1995
1995
1995
1995
1996
1997
1998
1999
2000
&A
27.7
28.07
28.37
26.52
36.23
51.96
52.4305970728
51.79
54.4601685724
52.4302023682
44.08
56.489740072
52.1199644843
44.6535158697
37.06
58.5193115716
51.8097266005
39.881079967
37.5524445631
35.24
60.5488830712
51.4994887167
34.5636026381
35.8251600602
35.7954601994
31.98
62.5784545708
51.1892508328
33.2342333059
34.5456900581
34.5611339857
16.17
63.9315022372
56.1530569742
37.2223413026
33.2662200559
33.3268077719
20.29
65.2845499036
61.1168631155
42.5398186315
34.5456900581
33.3268077719
15.77
66.63759757
66.0806692569
45.198557296
39.6635700667
34.5611339857
18.81
67.9906452364
71.0444753983
47.8572959604
43.5019800731
35.7954601994
20.03
69.3436929028
76.0082815396
49.1866652927
47.3403900796
37.0297864132
18.1553398058
72.3880501522
81.5925634487
49.8993300839
39.4984388408
75.4324074016
87.1768453577
53.7377400903
41.9670912683
78.476764651
92.7611272667
57.5761500968
44.4357436958
81.5211219004
98.3454091758
61.4145601032
46.9043961234
84.5654791498
103.9296910848
63.9735001075
49.3730485509
106.4115941555
108.8934972262
111.3754002969
113.8573033675
116.3392064382
8487IN90$
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1991
1992
1992
1992
1992
1992
1993
1993
1993
1993
1993
1994
1994
1994
1994
1994
1995
1995
1995
1995
1995
1996
1996
1996
1997
1997
1997
1998
1998
1998
1999
1999
1999
2000
2000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
&A
27.7
28.07
28.37
26.52
36.23
51.96
51.79
44.08
37.06
37.5524445631
35.24
35.8251600602
35.7954601994
31.98
34.5456900581
34.5611339857
32.3651685936
16.17
33.2662200559
33.3268077719
29.9677486978
17.0051897899
20.29
34.5456900581
33.3268077719
27.570328802
17.5070588091
15.77
39.6635700667
34.5611339857
27.570328802
18.674196063
18.81
43.5019800731
35.7954601994
29.9677486978
19.8413333169
20.03
47.3403900796
37.0297864132
32.3651685936
21.0084705709
18.1553398058
49.8993300839
39.4984388408
33.5638785415
21.0084705709
53.7377400903
41.9670912683
34.7625884894
23.3427450787
57.5761500968
44.4357436958
34.7625884894
25.6770195866
61.4145601032
46.9043961234
35.9612984374
29.1784313484
63.9735001075
49.3730485509
35.9612984374
31.5127058563
32.6798431102
35.0141176181
36.181254872
37.348392126
38.5155293799
BARBYYR
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1991
1992
1992
1992
1992
1992
1993
1993
1993
1993
1993
1994
1994
1994
1994
1994
1995
1995
1995
1995
1995
1996
1996
1996
1996
1996
1997
1997
1997
1997
1997
1998
1998
1998
1998
1998
1999
1999
1999
1999
1999
2000
2000
2000
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
&A
27.7
28.07
28.37
26.52
36.23
51.96
51.79
44.08
37.06
35.24
31.98
16.17
17.0051897899
20.29
17.5070588091
20.4544423167
15.77
18.674196063
18.9748553794
16.0572959604
18.81
19.8413333169
19.889714478
15.7295960429
19.334295136
20.03
21.0084705709
20.1156056135
16.384995878
18.3511953833
23.7910140148
18.1553398058
21.0084705709
20.2285511812
16.9311624073
17.5865622424
19.2250618302
23.3427450787
20.2172566245
17.3680956307
18.0234954658
20.5358615004
25.6770195866
21.1998830638
18.6788953009
19.6619950536
20.6450948063
29.1784313484
23.0070121475
20.6450948063
21.1912613355
21.6281945589
31.5127058563
25.2998071725
22.5020610058
22.2835943941
22.7205276175
32.6798431102
27.188257065
24.577493817
23.9220939819
23.812860676
35.0141176181
29.0767069575
26.5436933223
25.6698268755
25.0144270404
36.181254872
30.9651568501
28.4006595218
27.526793075
26.2159934048
37.348392126
32.8536067426
29.6022258862
29.1652926628
27.526793075
38.5155293799
34.7420566351
30.5853256389
30.3668590272
28.8375927453
31.6776586974
29.9299258038
32.769991756
30.9130255565
33.9715581204
31.7868920033
34.954657873
32.5515251443
35.9377576257
33.3161582852
36.9208573784
33.9715581204
37.9039571311
34.6269579555
38.7778235779
35.2823577906
39.5424567189
35.9377576257
40.3070898599
36.483924155
BASEFORE
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
&A
0.0296511463
0.0296511463
0.03
23.4484543511
0.0173219869
0.0173219869
0.03
36.7334325788
0.0323823095
0.0323823095
0.03
49.2809480426
0.04284109
0.0562575386
0.03
41.58524016
0.0121595217
0.0815642983
0.03
36.7544259095
0.0453943733
0.0753632338
0.03
35.0379155432
0.0296664089
0.0503572281
0.03
31.6734190442
0.0105917512
0.0386871865
0.03
16.0289376801
0.0601346458
0.0601346458
0.03
19.1268
0.041591745
0.0700194266
0.03
15.1220104204
0.0551642247
0.0623170208
0.03
18.3100497862
0.0356022963
0.0446189996
0.03
21.9569814651
0.0216083398
0.0340609947
0.03
17.4534239592
36.7595945486
33.4614889267
33.7471516184
31.3709574106
32.3884606433
30.2320487728
42.9532810903
32.3884606433
31.7119392722
61.3785247019
32.3884606433
31.7119392722
59.2305864897
60.2015797108
60.976
32.3884606433
31.7119392722
59.6189837781
62.5319634415
60.2011265051
51.9906098807
32.3884606433
31.7119392722
60.1239002531
64.8623471723
59.8449068216
43.628483816
32.3884606433
31.7119392722
60.6288167281
67.192730903
59.4886871382
41.2133356048
32.3884606433
31.7119392722
61.1337332031
69.5231146338
59.1324674547
37.123165247
32.3884606433
31.7119392722
62.1435661531
71.8534983645
58.7762477713
18.7628449744
32.3884606433
33.1918297716
64.0855525954
73.4070875183
64.4757627066
23.5412027257
32.3884606433
34.6717202709
66.0275390377
74.9606766722
70.175277642
18.1915195911
32.3884606433
36.1516107703
67.9695254799
76.514265826
75.8747925774
21.6324565588
32.3884606433
37.6315012697
69.9115119222
78.0678549798
81.5743075128
24.9435468484
32.3884606433
39.111391769
71.8534983645
79.6214441336
87.2738224482
21.0481465077
41.2255210539
73.4070875183
83.1170197298
93.6857767505
19.7886337308
43.3396503387
74.9606766722
86.6125953259
100.0977310529
17.2566235094
45.4537796235
76.514265826
90.108170922
106.5096853552
16.0490494037
47.5679089083
78.0678549798
93.6037465181
112.9216396575
17.14
49.6820381931
79.6214441336
97.0993221142
119.3335939598
122.1833514275
125.0331088952
127.8828663629
130.7326238306
133.5823812983
DOE818590$
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1991
1992
1992
1992
1992
1992
1992
1993
1993
1993
1993
1993
1993
1994
1994
1994
1994
1994
1994
1995
1995
1995
1995
1995
1995
1996
1996
1996
1996
1996
1997
1997
1997
1997
1997
1998
1998
1998
1998
1998
1999
1999
1999
1999
1999
2000
2000
2000
2000
2000
2001
2001
2001
2001
2001
2002
2002
2002
2002
2002
2003
2003
2003
2003
2003
2004
2004
2004
2004
2004
2005
2005
2005
2005
2005
2006
2006
2006
2006
2006
2007
2007
2007
2007
2007
2008
2008
2008
2008
2008
2009
2009
2009
2009
2009
2010
2010
2010
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
&A
36.7595945486
33.4614889267
33.7471516184
31.3709574106
42.9532810903
61.3785247019
60.976
51.9906098807
43.628483816
41.2133356048
37.123165247
18.7628449744
23.5412027257
18.1915195911
21.6324565588
24.9435468484
21.0481465077
20.7455207445
22.1204887616
19.7886337308
21.2891199511
19.4395410652
17.2566235094
21.0561488626
19.7759946606
16.0490494037
21.5220910397
20.1124482559
17.14
22.0767841077
20.4489018513
17.1528395062
17.2051309604
17.25
22.5205385622
20.7853554467
17.6650205761
17.708695769
17.44
22.9642930166
21.121809042
18.2399176955
18.2122605776
17.63
23.6299246982
21.4582626374
18.8148148148
18.7158253862
17.82
24.4064949935
21.7947162327
19.3688065844
19.2193901948
18.01
25.4049425159
22.1311698281
19.9959670782
19.7229550034
18.2
26.2924514248
23.0241069891
20.5395061728
20.2531309604
18.504
27.2908989473
23.9170441501
21.0725925926
20.7833069174
18.808
28.0674692425
24.8099813111
21.5638683128
21.3134828744
19.112
28.5112236969
25.7029184722
22.0342386831
21.8436588314
19.416
28.9549781514
26.5958556332
22.4732510288
22.3738347884
19.72
29.5096712194
27.2922611702
22.9749794239
22.7504848892
19.858
30.175302901
27.9886667073
23.4558024691
23.1271349899
19.996
30.9518731963
28.6850722444
23.978436214
23.5037850907
20.134
31.7284434915
29.3814777814
24.5637860082
23.8804351914
20.272
32.5050137868
30.0778833185
25.2118518519
24.2570852921
20.41
24.6727011417
20.524
25.0883169913
20.638
25.5039328408
20.752
25.9195486904
20.866
26.33516454
20.98
DOE8488$
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1991
1991
1991
1991
1992
1992
1992
1992
1993
1993
1993
1993
1994
1994
1994
1994
1995
1995
1995
1995
1996
1996
1996
1997
1997
1997
1998
1998
1998
1999
1999
1999
2000
2000
2000
&A
27
29.4
14.57
25
14.85
15
18.11
23
18.65
16
16.8
14.7
23
14.7
17
17.61
14.4
25
18
17.81
15
27
18
17.91
15.5
28
20
17.9
15.9
29
22
18.77
17.1
29
25
20.37
18.9
30
27
22.4
20.6
30
28
24.072
22.5
30
25.744
24.3
31
27.416
26
32
29.088
27.1
33
30.76
28
DOEVARIOUS90$
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1991
1992
1992
1992
1992
1992
1993
1993
1993
1993
1993
1994
1994
1994
1994
1994
1995
1995
1995
1995
1995
1996
1996
1996
1996
1996
1997
1997
1997
1997
1997
1998
1998
1998
1998
1998
1999
1999
1999
1999
1999
2000
2000
2000
2000
2000
2001
2001
2001
2001
2001
2002
2002
2002
2002
2002
2003
2003
2003
2003
2003
2004
2004
2004
2004
2004
2005
2005
2005
2005
2005
2006
2006
2006
2006
2006
2007
2007
2007
2007
2007
2008
2008
2008
2008
2008
2009
2009
2009
2009
2009
2010
2010
2010
2010
2010
&A
0.0296511463
0.0296511463
0.03
23.4484543511
0.0173219869
0.0173219869
0.03
36.7334325788
0.0323823095
0.0323823095
0.03
49.2809480426
0.04284109
0.0562575386
0.03
41.58524016
0.0121595217
0.0815642983
0.026
0.03
36.7544259095
0.0453943733
0.0753632338
0.024
0.03
35.0379155432
0.0296664089
0.0503572281
0.02
0.03
31.6734190442
0.0105917512
0.0386871865
0.038
0.03
16.0289376801
0.0601346458
0.0601346458
0.027
0.03
19.1268
0.041591745
0.0700194266
0.039
0.03
15.1220104204
0.0551642247
0.0623170208
0.038
0.03
18.3100497862
0.0356022963
0.0446189996
0.022
0.03
21.9569814651
0.0216083398
0.0340609947
0.0225651826
0.03
17.4534239592
0.031876741
0.0340609947
0.0203119188
0.03
16.3993228737
0.0239164658
0.0258702511
0.03
14.25
HIGHEST
1975
1975
1975
1975
1975
1975
1976
1976
1976
1976
1976
1976
1977
1977
1977
1977
1977
1977
1978
1978
1978
1978
1978
1978
1979
1979
1979
1979
1979
1979
1980
1980
1980
1980
1980
1980
1981
1981
1981
1981
1981
1981
1982
1982
1982
1982
1982
1982
1983
1983
1983
1983
1983
1983
1984
1984
1984
1984
1984
1984
1985
1985
1985
1985
1985
1985
1986
1986
1986
1986
1986
1986
1987
1987
1987
1987
1987
1987
1988
1988
1988
1988
1988
1988
1989
1989
1989
1989
1989
1989
1990
1990
1990
1990
1990
1990
1991
1991
1991
1991
1991
1991
1992
1992
1992
1992
1992
1992
1993
1993
1993
1993
1993
1994
1994
1994
1994
1994
1995
1995
1995
1995
1995
1996
1996
1996
1997
1997
1997
1998
1998
1998
1999
1999
1999
2000
2000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
&A
0.0296511463
0.0296511463
0.03
23.4484543511
0.0173219869
0.0173219869
0.03
36.7334325788
0.0323823095
0.0323823095
0.03
49.2809480426
0.04284109
0.0562575386
0.03
41.58524016
0.0121595217
0.0815642983
0.026
0.03
36.7544259095
0.0453943733
0.0753632338
0.024
0.03
35.0379155432
0.0296664089
0.0503572281
0.02
0.03
31.6734190442
0.0105917512
0.0386871865
0.038
0.03
16.0289376801
0.0601346458
0.0601346458
0.027
0.03
19.1268
0.041591745
0.0700194266
0.039
0.03
15.1220104204
0.0551642247
0.0623170208
0.038
0.03
18.3100497862
0.0356022963
0.0446189996
0.022
0.03
21.9569814651
0.0216083398
0.0340609947
0.03
17.4534239592
W/TROUGH
1979
1979
1979
1980
1980
1980
1981
1981
1981
1982
1982
1982
1983
1983
1983
1984
1984
1984
1985
1985
1985
1986
1986
1986
1987
1987
1987
1988
1988
1988
1989
1989
1989
1990
1990
1990
1991
1991
1991
&A
0.0296511463
0.0296511463
0.03
23.4484543511
0.0173219869
0.0173219869
0.03
36.7334325788
0.0323823095
0.0323823095
0.03
49.2809480426
0.04284109
0.0562575386
0.03
41.58524016
0.0121595217
0.0815642983
0.03
36.7544259095
0.0453943733
0.0753632338
0.03
35.0379155432
0.0296664089
0.0503572281
0.03
31.6734190442
0.0105917512
0.0386871865
0.03
16.0289376801
0.0601346458
0.0601346458
0.03
19.1268
0.041591745
0.0700194266
0.03
15.1220104204
0.0551642247
0.0623170208
0.03
18.3100497862
0.0356022963
0.0446189996
0.03
21.9569814651
0.0216083398
0.0340609947
0.03
17.4534239592
0.031876741
0.0340609947
0.03
16.3993228737
0.0239164658
0.0258702511
0.03
14.25
Source: www.eia.doe.gov/oiaf/ieo99/highlights.html
UHCBA Energy Institute *
Bermuda Triangle: Energy-Economy-Environment
OPEC or Other Producer Collusion - Price of Oil & Role of Technology
Globalization, Liberalization & Economic Crises (e.g., Asian Crisis of 1998)
Economic Sanctions - Political Risk
Environmental Concerns - Global Warming
Minimum conditions:
A good with no easy substitutes
An entry cost for new producers that is very high relative to the marginal cost of cartel producers
Incentives to cooperate
UHCBA Energy Institute *
Reserve Additions
&C&"Arial,Bold"&16OPEC Output and the Price of Crude Oil
Price
&C&"Arial,Bold"&16OPEC's Share in World Oil Production and Reserves
Production
Reserves
Percent
Sheet4
OPEC
Non-OPEC
Percent
Sheet5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Production
Reserves
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Sheet6
&A
World Consumption
OPEC output
OPEC Production, MMB/D
Chart7
1960
1960
1961
1961
1962
1962
1963
1963
1964
1964
1965
1965
1966
1966
1967
1967
1968
1968
1969
1969
1970
1970
1971
1971
1972
1972
1973
1973
1974
1974
1975
1975
1976
1976
1977
1977
1978
1978
1979
1979
1980
1980
1981
1981
1982
1982
1983
1983
1984
1984
1985
1985
1986
1986
1987
1987
1988
1988
1989
1989
1990
1990
1991
1991
1992
1992
1993
1993
1994
1994
1995
1995
1996
1996
1997
1997
Production
Reserves
Percent
37.4856870229
67.053403856
37.7931341953
66.7774086379
40.9375
69.1334924834
41.3509376196
70.1754385965
42.9266572638
70.3733913359
43.2277227723
69.8594024605
42.7269966596
67.8799036964
43.9638111394
71.6598150051
45.6677018634
72.2872661436
47.9611417606
71.2281659389
47.6203966006
74.7614503817
51.1995053586
70.652707345
50.2894016425
67.3114416838
54.8922413793
69.3541760384
54.7379755922
66.9504619306
52.73518834
68.7027065325
52.8950122079
68.2862780814
51.7333779936
66.6110183639
48.9694148936
68.1220003096
48.795276847
69.3470469067
44.6476510067
67.9127725857
40.0855920114
66.9546436285
35.1159311892
65.0812583868
32.857679309
66.4179104478
32.0058726372
66.9656203288
29.9740644683
68.1655448947
32.509336653
67.8668381197
32.7208480565
68.4685976484
34.6403000341
75.5789710937
36.9248787017
74.4985673352
38.3027901601
76.5851223165
38.6480651055
77.4497047343
40.5181002989
77.6387487386
40.97593361
77.2908726179
40.8016393443
77.3445857959
40.1969575661
76.6991521197
40.5296875
77.1168354179
41.5029257776
77.4027287004
Sheet1
Production
Reserves
Price
Reserve Additions
&C&"Arial,Bold"&16OPEC Output and the Price of Crude Oil
Price
&C&"Arial,Bold"&16OPEC's Share in World Oil Production and Reserves
Production
Reserves
Percent
Sheet4
1.4594427481
4.9534904195
1.5393557214
5.092845
1.6957256183
5.4795777592
1.7926477273
5.982486631
1.9074951706
6.0241562149
2.0045157233
6.1017784257
2.1429376174
6.0704585538
2.0350484044
6.5587488667
2.1508732677
6.6749216028
2.2371599356
6.0092392335
2.0360804084
6.6340302457
2.0994049549
4.8174303233
2.2069515988
4.4921935137
2.4119578918
4.485504729
3.0247112285
3.6747162445
2.0973939588
4.126525253
2.4608109009
4.7186378213
2.8257769424
5.25965
2.4438409091
5.4422049539
2.508247191
5.9546771734
2.2276720183
5.845315534
1.8905990783
5.7254901961
1.5703780069
5.4079846285
1.4353932584
5.8010666667
1.4208928571
6.1191176471
1.2406932773
6.2064777328
1.4046736842
6.1590706981
1.4156649215
6.3206912233
1.1059121748
6.4578218736
1.1916494083
5.9466292135
1.104041721
5.816652452
1.0976415094
5.9845095428
1.1575253444
5.8999548736
1.1693793068
5.7330197429
1.1765471144
5.8277283801
1.1916358113
5.8356935841
1.2186947707
6.026359397
1.247494544
6.022743364
OPEC
Non-OPEC
Percent
Sheet5
Production
Reserves
Sheet6
&A
World Consumption
OPEC output
OPEC Production, MMB/D
A Question of Perspective
Short-term perspective: higher price now is better (shared by companies and countries)
Long-term perspective: can live with lower prices for a while (should make sense for Saudi Arabia, but for companies?)
UHCBA Energy Institute *
Reserve Additions
&C&"Arial,Bold"&16OPEC Output and the Price of Crude Oil
Price
&C&"Arial,Bold"&16OPEC's Share in World Oil Production and Reserves
Production
Reserves
Percent
Sheet4
1.4594427481
4.9534904195
1.5393557214
5.092845
1.6957256183
5.4795777592
1.7926477273
5.982486631
1.9074951706
6.0241562149
2.0045157233
6.1017784257
2.1429376174
6.0704585538
2.0350484044
6.5587488667
2.1508732677
6.6749216028
2.2371599356
6.0092392335
2.0360804084
6.6340302457
2.0994049549
4.8174303233
2.2069515988
4.4921935137
2.4119578918
4.485504729
3.0247112285
3.6747162445
2.0973939588
4.126525253
2.4608109009
4.7186378213
2.8257769424
5.25965
2.4438409091
5.4422049539
2.508247191
5.9546771734
2.2276720183
5.845315534
1.8905990783
5.7254901961
1.5703780069
5.4079846285
1.4353932584
5.8010666667
1.4208928571
6.1191176471
1.2406932773
6.2064777328
1.4046736842
6.1590706981
1.4156649215
6.3206912233
1.1059121748
6.4578218736
1.1916494083
5.9466292135
1.104041721
5.816652452
1.0976415094
5.9845095428
1.1575253444
5.8999548736
1.1693793068
5.7330197429
1.1765471144
5.8277283801
1.1916358113
5.8356935841
1.2186947707
6.026359397
1.247494544
6.022743364
OPEC
Non-OPEC
Percent
Sheet5
Production
Reserves
Sheet6
&A
World Consumption
OPEC output
OPEC Production, MMB/D
Increased non-OPEC production
Increased use of alternatives, especially natural gas
Increased energy efficiency
Initially, lower D for oil due to economic recessions in importing countries caused by high prices
UHCBA Energy Institute *
Adversity is the Mother of Invention
1859 1870 1935 1938 1947 54 78 83 85 90 92 98 2000
Oil and gas discovered in U.S. (Titusville, 1859; Spindletop, 1901)
Advances in drilling, early seismic, shallow offshore E&P
Long-line pipe transmission
3-d seismic, horizontal drilling, measurement
while drilling, offshore below 1,000ft
Mainframes Minis Micros Work Stations ?
4-d seismic, offshore below 5,000ft
Cumulative U.S.
oil production
Pipeline trenching and welding, compression,
pressure control, metering
UHCBA Energy Institute *
Energy is a commodity.
A
High
B
Shell Interdisciplinary Scholars Program
State
Ownership/
Control
(Hypothesis)
Commercial trade regimes can create pressure for monopoly “devolution” and emergence of competition. The flow is generally from trade laws, to regulation to open access; with each step, monopoly power weakens. An opposing force is the strength of state ownership/control, which can act to preserve monopoly power. This happens in all contexts -- state, provincial and national.
UHCBA Energy Institute *
Notable examples of backpedaling on energy sector reform are found
in Russia and other NIS
in Latin America
in the U.S. and Canada (electricity)
Where energy is considered a “free good,” the transition is more tenuous
Plan for disruptions in development scenarios!
UHCBA Energy Institute *
It’s a Tough Neighborhood...
2,642 billion barrels oil equivalent
R/D Shell (16.8), Exxon (13.7), BP (8.3), Mobil (6.4), Chevron (6.0), Amoco (5.5), Total (4.2), ARCO (3.8), Texaco (3.7),
Elf (3.5)
lay of the land
Countries slated for major oil and gas transportation projects
Central Asia
Sanctions Don’t Work…but the Market Will
The debate: Does investment lead to better “country behavior”? No clear evidence
Are there market incentives for good “country behavior”? Better evidence
New, highly publicized “corruption” ratings
Credit ratings reflect country behavior
Foreign direct investment flows
UHCBA Energy Institute *
A, natural monopoly outcome, is what we want to avoid
B (P=MC) is equivalent to perfect competition, but negative profits
C yields zero economic profit no incentive to maintain service quality
D provides a positive return: cost-of-service (or, rate-of-return regulation)
UHCBA Energy Institute *
Regulated (or national) monopoly
Unbundled because competitive efficiencies in supply & retail are expected to surpass benefits of VI
T&D remain natural monopolies with regulated open access
UHCBA Energy Institute *
Technology drives industry economics drives policy
New technologies facilitate the rise of competition
“Contestability” and the limits to monopoly
The threat of “potential competition”
UHCBA Energy Institute *
Technical Change Shifts the Production Function
A B= effect of technology change
B C= effect of an increase only in capital per worker-hour
A B > B C
Importance of new products, R&D
Is some monopoly power necessary to provide incentives for R&D?
EMBED Word.Document.6 \s
Capital per worker-hour
Total social costs: OCRHQe
UHCBA Energy Institute *
Total social benefits: OEBQ*
Total social costs: OCRBQ*
Net social benefits: CEBR
Difference between the two: BHA, welfare loss due to externality
UHCBA Energy Institute *
Solutions to externality
Pigovian tax
Set a tax equal to the difference between MSC and MPC at the socially optimum level of output, i.e., BV
But, there are problems:
How to calculate MSC?
UHCBA Energy Institute *
Rational objective analysis to confirm or refute
Policy prescriptives realistically debated
Timing based on evidence
No consensus on scientific basis or approach
Policy prescriptives politically debated
Adjust accordingly
UHCBA Energy Institute *
UHCBA Energy Institute *
Consumers of oil are now more powerful: choices
Last line of defense for oil, transportation, is under attack
Low price of oil may help (or, not!)
«
0
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0100000020000003000000400000050000006000000
0.00
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050001000015000200002500030000
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0102030405060708090100
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1.00
1.10
020000400006000080000100000120000140000
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020000040000060000080000010000001200000
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