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Appropriate Government Policy Toward Commercialization of New Energy Supply Technologies

Richard Schmalensee

Year: 1980
Volume: Volume 1
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol1-No2-1
View Abstract

Abstract:
This article considers the merits of government support for the commercialization of particular energy supply technologies, and sketches a framework for the economic evaluation of different schemes for such support.' Specific current proposals are not analyzed in detail, as the emphasis is on identifying conditions under*Professor of Applied Economics, Sloan School of Management, Massachusetts Institute of Technology.



Severance Taxes and the Government's Share of Value from Oil and Gas Production

John Lohrenz and John A. Pederson

Year: 1985
Volume: Volume 6
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-NoSI-17
No Abstract



The Incidence of Severance Taxes in a Residual Demand Framework

Albert L. Danielsen and Phillip A. Cartwright

Year: 1985
Volume: Volume 6
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-NoSI-19
No Abstract



International Energy Policy: The Conflict of Investment Needs and Market Signals

Paul Tempest

Year: 1985
Volume: Volume 6
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No2-2
View Abstract

Abstract:
I am delighted to have the privilege to welcome you to this, our sixth annual North American Conference, here in San Francisco today. By some curious coincidence we have elected to meet on the very day, November 6th, when in the United States you are making the most important world leadership decision of the decade. Today, the rest of the world will be watching to see whether the U.S. electorates will endorse, inter alia, the deregulation of oil and gas and the underlying reliance on market forces to produce acceptable energy solutions for national security.Energy security, then, and the role of government is the theme I have chosen today, as I believe it still lies very much at the heart of the current energy debate. Can our energy systems survive and prosper? To what extent are volatile markets or irresponsible governments likely to mess them up? In this I conclude that, while on resource and production cost grounds, the Arabian Gulf still presents a neglected opportunity and Western Europe a neglected risk, the greatest danger lies in the United States' imposing its highly market-oriented energy logic on the rest of the world.



Electricity Restructuring in Ontario

Michael J. Trebilcock and Roy Hrab

Year: 2005
Volume: Volume 26
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No1-6
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Abstract:
This paper examines the short-lived electricity sector restructuring initiative of the province of Ontario, Canada�s largest province. In May 2002, following years of planning and consultation Ontario opened its retail and wholesale electricity markets to competition. The summer of 2002 saw retail prices reach levels that consumers had never previously encountered. By December 2002, the provincial government froze retail electricity prices, covering approximately half of Ontario�s electricity consumption. While the weather played a significant role in driving prices higher during the summer of 2002, other factors also played a major role. The other factors reviewed in this paper fall into two categories. The first category consists of market design problems, such as market rules (e.g., trading arrangements) and market structure (e.g., the degree of competition in the generation sector). The second category covers political economy problems, in particular the lack of political will to allow retail prices to reflect wholesale prices and to address effectively structural problems in the sector. Finally, this paper examines some of the new restructuring initiatives being pursued by the recently elected provincial government of Ontario as the province continues to struggle to bring order to its electricity sector.



After the Natural Gas Bubble: An Economic Evaluation of the Recent U.S. National Petroleum Council Study

Ken Costello, Hillard G. Huntington, and James F. Wilson

Year: 2005
Volume: Volume 26
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No2-5
View Abstract

Abstract:
This perspective paper reviews and critiques the policy analysis and modeling of future natural gas markets in the National Petroleum Council�s 2003 natural gas study (NPC Study). The NPC Study provided an important and timely review of long-term natural gas supply, demand and potential policies to increase supply or suppress demand. However, its long-term scenarios used assumptions and simplifications that led to understating likely longer-term market reactions to higher natural gas prices, which results in exaggeration of the potential benefits of the policies recommended by the NPC. In addition, the narrow scope of the NPC Study did not address many important considerations in natural gas policy, such as the costs of recommended policies, or their impacts on taxpayers, resource owners, or the environment. Overall, the study does not provide the evidence needed to justify major natural gas policies, especially in view of the current uncertain market environment.



Is the Strategic Petroleum Reserve our Ace in the Hole?

Timothy J. Considine

Year: 2006
Volume: Volume 27
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No3-6
View Abstract

Abstract:
The Strategic Petroleum Reserve (SPR) is often touted as a vital asset in mitigating the adverse effects of oil supply disruptions on the economy. The importance of SPR, however, largely depends upon the effect of stock sales on market prices. To address this question, this study develops a monthly econometric model of the world crude oil market. Inventories, consumption, production, and prices for crude oil are determined within a dominant producer pricing framework in which Saudi Arabia adjusts output based upon market demand and competitive fringe supply. The estimation results provide additional support for the dominant producer pricing model for world oil markets and reasonable estimates of short-run supply and demand elasticities. Several model simulations are conducted to assess the impacts of SPR policies. For example, the gradual build-up of the SPR by the Bush Administration resulted in a very small, almost imperceptible increase in world prices. Similarly, the Clinton sale from SPR had minor impacts on market prices. Another simulation indicates that while SPR sales can lower world prices during a supply shock, the required drawdown would be so substantial the reserve would be significantly depleted after just a few months. These findings suggest that once played, the SPR card has modest impacts on world prices and could be easily trumped by actions of other players, including output adjustments by world oil producers.



Buyer Beware: The Asymmetric Impact of the Strategic Petroleum Reserve on Crude Oil Prices

Reid B. Stevens and Jeffery Y. Zhang

Year: 2021
Volume: Volume 42
Number: Number 6
DOI: 10.5547/01956574.42.6.rste
View Abstract

Abstract:
Have U.S. oil market policy interventions succeeded in lowering the price of crude oil? This paper uses a structural vector autoregression model of the U.S. oil market to estimate the effect of purchases and releases by the Strategic Petroleum Reserve (SPR). Unanticipated releases from the SPR have no measurable impact on oil prices, but unanticipated purchases for the SPR raise oil prices by about 1 percent. These results are robust to identification using external instruments.



Strategic Behavior and Market Design in Regional Climate Policy

Brittany L. Tarufelli

Year: 2023
Volume: Volume 44
Number: Number 3
DOI: 10.5547/01956574.44.2.btar
View Abstract

Abstract:
U.S. electricity markets vary by region and imperfectly overlap with regional climate policies. Although emissions leakage across emissions-regulated and -unregulated areas may depend on regional market design, and the extent of trading between market designs, previous studies of leakage from regional climate policies have focused on market power and market efficiency within only a centralized region following market rules. I develop a theoretical model which considers a second-best problem where a climate policy to correct for a negative externality from carbon emissions can be distorted by another market failure from the market design itself. My model allows for several types of non-overlapping climate policies and electricity market designs, and generates leakage predictions for these combinations.





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