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Energy Journal Issue

The Energy Journal
Volume 9, Number 1

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Energy Economics in Developing Countries: Analytical Framework and Problems of Application

Mohan Munasinghe

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-1View Abstract

The pervasive and vital role of energy in national economies indicates that the identification of energy issues and energy policy analysis and implementation are important areas of study. While the drop in world oil prices which began in 1986 has provided some relief to the economies of oil-importing nations, energy-related problems still preoccupy the minds of decision-makers in most developing countries. Thus, while most of the key energy issues identified during the past decade persist, the availability of adequate energy resources at reasonable cost remains a vital precondition for continued economic growth. Typically, energy investments still account for about 25 percent of total public capital investments in developing countries.

Defending the Price of Oil

Dr. Edith Penrose

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-2View Abstract

Potential surpluses of oil have been around for a very long time; as a consequence, the defense of prices has always required continually renewed vigilance. It is true that there have been short periods of temporary scarcity and, from time to time, fears of an imminent long-run scarcity, as in the 1920s in the United States and again today. But for at least 60 years, the oil industry seems to have been more concerned with maintaining prices against the pressure of surpluses. "Competition" was always the scapegoat, for in spite of the strong monopolistic elements in the organization of the industry, gluts were the direct result of the behavior of oil companies as they competed to discover and control crude oil production and markets.

Nuclear Energy After Chernobyl: Views from Four Countries

Ulf Hansen, Christine Chapuis, Thomas J. Connolly and Arto Lepisto

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-3View Abstract

At the end of 1986, 397 nuclear power plants with a total of 274 GW were in operation worldwide. Their electricity generation was equivalent to burning 500 million tons of coal or 7 million barrels per day of oil, roughly 40 percent of the OPEC output. When the 134GW under construction are finished, uranium-based electricity will substitute some 850 million tons of coal equivalent (mtce) per year. Nuclear power is now the largest primary energy source for electricity generation in the twelve countries of the European Community.

Water, Wind and Soil: Hidden Keys to The Water Planet Earth and to Economic Macroprocesses

Gonzague Pillet

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-4View Abstract

This essay tentatively integrates the analysis of macroeconomic processes with that of natural ecological systems via energy balances and calculations. On the one hand, entropy studies concerning ecology and economy by Tsuchida (1976), Tamanoi, Tsuchida & Murota (1984), Murota (1984, 1985, 1987), Tsuchida & Murota (1985), and Kawamiya (1985) have stressed the major importance of the water cycle, wind energy, and the topsoil function as the hidden keys to the earth's open steady state and the renewability of its living systems.

Energy Planning in Taiwan: An Alternative Approach Using a Multiobjective Programming and Input-Output Model

George J. Y. Hsu, Ping Sun Leung and Chauncey T. K. Ching

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-5View Abstract

Faced with limited energy resources and soaring energy demand arising from rapid economic growth, Taiwan has to import a substantial amount of energy. In 1983, 88 percent of its total energy requirement (35.54 million kiloliters of oil equivalent) was imported. Since this heavy dependence will likely continue to increase for the next decade, energy economic planning in Taiwan is a critical issue. A major concern has been how "to achieve a certain economic growth rate with a minimum consumption of energy" (Kuo, 1983, p. 312).

The Effect of Load Management upon Transmission and Distribution Costs: A Case Study

Michael A. Einhorn

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-6View Abstract

A new era may be emerging for the strategists and decision makers who are responsible for reliably and economically supplying electricity to America's homes and businesses. In the last decade, fuel shortages, price hikes, record-high interest rates, and a new environmentalist awareness have led the nation's utility planners to use conservation and load management strategies in order to curtail their customers' demands for energy and plant capacity. Undertaken primarily to reduce requirements for future generation capacity, load management strategies generally succeeded in reducing system peak load. However, utility planners often implemented these strategies with little regard to the effects upon their company's transmission and distribution (T&D) capacity requirements.

The Residential Demand for Electricity in the TVA Power Service Area: Appliance Consumption from 1979 to 1986

Gary L. Jackson

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-7View Abstract

This paper compares appliance-specific electricity consumption at five points in time from 1979 to 1986. One of the major findings is that residential customers have reduced space heating electricity consumption substantially while space cooling consumption has remained relatively stable. Appliance-specific estimates of electricity consumption for seven other appliances are also provided. Impacts of six major factors affecting appliance electricity consumption (price, income, age, weather, living quarters' size, and the number of people) are estimated.

Optimal Off-Peak Incremental Sales Rate Design in Electricity Pricing

Chi-Keung Woo and Dewey Q. Seeto

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-8View Abstract

Nonlinear pricing has recently become a subject of intense research in utility pricing. This research begins with the work on multipart tariffs which points out the superiority of nonlinear pricing over linear pricing and the importance of self-selection in regulatory pricing (see e.g., Brown and Sibley (1986), Faulhaber and Panzar (1977), Willig (1978) and Mirman and Sibley (1980)). That is, by providing a menu of rate options from which a ratepayer chooses what he most prefers, the utility and the ratepayers are both better off than when only one linear rate schedule is available (e.g., a non-time differentiated energy charge).

Inefficiency of Avoided Cost Pricing of Cogenerated Power

Chi-Keung Woo

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-9View Abstract

Section 210 of the Public Utility Regulatory Act of 1978 requires that the rates paid to qualifying small power production facilities (QFs) should be "just and reasonable" and "shall not discriminate against qualifying cogenerators." However, the rates should not "exceed the incremental cost to the electric utility of the alternative electric energy." Armed with this federal regulation, the California Public Utilities Commission (CPUC) in July 1985 issued Decision No. 85-07-022 for the Phase I of the Order-Instituting-Rulemaking No. 2 (OIR-2) arguing that privately owned electric utilities should pay QF's the cost of owning and operating a power plant that can be displaced by QF production. The total avoided cost is the difference between total cost of utility generation before QF production and after QF production (see Appendix 1 of the CPUC decision).

Pricing Policies of an Oil Cartel with Expectation of Substitute Producers

Majid Ahmadian

DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-10View Abstract

The proposition that the net price in a competitive market and the net marginal revenue in a monopolistic market rise at the rate of interest was first demonstrated by Hotelling (1931) for a non-durable exhaustible resource. However, Levhari and Liviatan (1977) and Fisher (1981) have shown that Hotelling's r-percent rule is not valid when extraction costs rise with cumulative production. This r-percent rule also applies to a perfectly durable resource when the resource is produced in a competitive market. It does not apply in the case of a monopolistic market.