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Energy Journal Issue

The Energy Journal
Volume 4, Number 1

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The Simple Economics of Industrial Cogeneration

Paul L. Joskow and Donald R. Jones

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-1
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Rising energy prices and dependence on insecure supplies of foreign petroleum have led energy consumers and energy policymakers to seek methods to use energy more efficiently. Industrial cogeneration has frequently been seen as such a method. By generating electricity in conjunction with the production of steam for industrial processes, less energy is used than when process steam and electricity are produced separately. Most recent U.S. energy policy studies have spoken favorably about the potential for cogeneration.' Some specific studies have indicated opportunities to replace central station electric power generation with industrial cogeneration capacity, and, in the process, to reduce domestic energy consumption substantially.

Natural Gas Availability and the Residential Demand for Energy

Gail R. Blattenberger, Lester D. Taylor, and Robert K.Rennhack

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-2
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Not all households have access to pipeline-delivered natural gas.This fact affects not only the demand for natural gas but the demand for electricity and fuel oil as well. Since electricity and natural gas are substitutes in cooking, space heating, water heating, and (to a much lesser extent) cooling, the price elasticity of demand for electricity will be larger when gas is available than when it is not. Fuel oil and natural gas are substitutes in cooking, space heating, and water heating, so that oneshould also expect larger price elasticities for fuel oil when gas is available.

The Economics of Gas Utilizationin a Gas-Rich, Oil-Poor Country: The Case of Bangladesh

Gulder Schramm

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-3
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It has become an article of faith that clean-burning, low-polluting natural gas is a premium fuel and that on a net heat basis it is inherently more valuable than its closest competitor, fuel oil. This conclusion has been drawn by comparing pollution characteristics of both fuels. While the conclusion is correct, it is correct only in regions that have free access to both natural gas and oil delivered to the user's premises at similar costs per Btu.

The Future of OPEC: Price Level and Cartel Stability

George Daly, James M. Griffin, and Henry B. Steele

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-4
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In the wake of events associated with the Iranian revolution, the world price of oil increased from $15 to $32 per barrel. The Energy Modeling Forum's recent review of 10 world oil models shows virtual unanimity in holding that this price increase will be permanent and, indeed, that the real price of oil will increase in the future. The purpose of this paper is to seriously question the assumptions underlying such long-run projections-and hence the projections themselves. We conclude that the 1978-79 price hikes may prove to be a watershed event that effects fundamental changes in the long-run supply and demand for oil.

The United States' Role in the International Thermal Coal Market

D. Alec Sargent

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-5
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Recent studies have projected a huge buildup in international thermal coal trade, including a major role for U.S. exports (World Coal Study, 1980; International Energy Agency, 1978; Department of Energy, 1979). Given high-priced and insecure oil supplies, opposition to nuclear power, and the high cost of domestic coal supplies in Western Europe and the Far East, there is little doubt that international thermal coal trade will increase substantially. However, the role of the United States is highly uncertain.

The Supply, Demand, and Average Price of Natural Gas under Free-Market Conditions

Jack W. Wilkinson

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-6
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Editor's note: The following paper is of particular interest because the model it summarizes is based an a market equilibration process that generates gas prices differently than the models discussed in our special issue on gas deregulation (October 1982). It should be pointed out that while this paper was reviewed by a panel of expert readers, it has not undergone the anonymous refereeing process that is standard for scholarly papers published in The Energy Journal.

Nuclear Power: Epilogue or Prologue?

Harold R. Denton

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-7
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Judging by the continuing stream of nuclear power plant cancellations and downward revisions of nuclear energy forecasts, there is nothing riskier than predicting the future of commercial nuclear power. U.S. Nuclear Regulation Commissioner John Ahearne (1981) likens the recent events affecting the nuclear power industry in the United States to a Greek tragedy. Others, particularly other nations, take a different view about the future.

The Natural Gas Industry in Transition

George H. Lawrence and Michael I. German

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-8
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After 25 years of field price regulation, the U.S. natural gas industry is moving to a deregulated field market. This transition period has been made more difficult because of the international recession, depressed oil prices, and statutory restraints on gas use that were originally designed under assumptions of declining gas supply.

Utility Diversification

Alfred E. Kahn

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-9
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Diversification by public utility companies is a topic in which I have had a longstanding interest. The second volume of my Economics of Regulation, for example, contains a 73-page chapter largely devoted to this subject. I have taken the occasion to reread that discussion, and have observed with interest-and some amusement-how similar the issues were as I saw them then to the issues with which the National Association of Regulatory Utility Commissioners is grappling today. The entire chapter consists of the advantages and possible benefits of utility company diversification, on the one side, and the possible drawbacks and dangers, on the other. The first of these could well have been written by the utility companies today; the other, by those regulators and members of the public at large who are resolutely opposed to any such dilutions of the public utility concept. My own not very striking conclusion was that "The balance of social advantage will obviously vary from one industry to another [p. 268].... There is no single optimum pattern or combination for all situations [p. 324]...."