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Energy Journal Issue

The Energy Journal
Volume 11, Number 1

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Oil Tomorrow: Supply Conditions in the Coming Decade

Alirio A. Parra

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-1View Abstract

The events of the recent past serve to underscore the cyclical nature of the petroleum business. From the boom years of the 19?0s to the bust years of the 1980s, the oil industry has struggled to adapt to changing circumstances. The condition of stagnation and contraction masked the real long-term investment requirements of the industry and narrowed investment opportunities. All in all, the period wreaked havoc on investment budgets, the industry's most strategic component.

Energy Supply in the 1990s and Beyond


DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-2View Abstract

I am both honored and pleased to be invited to address this, the 11th Annual Conference of the International Association for Energy Economics. Honored, because your Association is a body whose gatherings are always marked by the distinction of the participants, drawn from the ranks of the oil industry, other energy sectors, the academic world, international institutions and government departments. Accordingly, the presentations of the speakers have an impact which extends far beyond the bounds of your membership.

Excerpts from the Remarks of Andres Perez


DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-3View Abstract

It is a testament to the importance of this Association that both producers and consumers of energy can meet together to discuss and analyze two of the most vital issues of our time, namely, the need to find a formula by which to guarantee a continuous and smooth trade of energy that all countries need for economic growth, and the increasingly urgent requirement that the production and consumption of energy do not threaten the long-run environmental balance of our planet.

Solving the Energy Problems in Developing Countries

Jose Goldemberg

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-4View Abstract

The industrialized nations have shown a remarkable ability to face the energy crisis of the 1970s by a combination of strategies which led in effect to the destruction of the OPEC cartel. The most important of these strategies was the reduction in oil imports made possible by the adoption of energy conserving technologies. In addition to that there was a remarkable shift from the use of oil to electricity which implies also a more efficient use of energy. While thermal cycles such as internal explosion motors used in automobiles convert only some 30 percent of the energy of the fuel into motive power in the wheels, electricity (once produced) can be converted into motive power with an efficiency of almost 100 percent. Of course the production of electricity from coal or oil goes also through a thermal cycle where energy is lost but the efficiency of conversion has been rising continuously, as shown in Figure 1. This shows the evolution of the thermal efficiency of British electrical generating stations (56 thermal power plants burning coal with a total generating capacity of 46.7 OW). In the period 1970-1985 the efficiency increased from 30 percent to 35 percent, equivalent in reality to an additional 10 mW of coal burning capacity.

Excerpts from the Remarks of Celestino Armas


DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-5View Abstract

Allow me to briefly review Venezuela's existing energy potential. Our conventional crude oil reserves stand at 59 billion barrels, while our reserves of extra-heavy oil and natural bitumens are in the order of 260 billion barrels. At its present production rate, Venezuela holds conventional oil reserves for 94 years, while the life-span of its non-conventional crude resources is 360 years.

The Target Capacity-Utilization Model of OPEC and the Dynamics of the World Oil Market

Stephen G. Powell

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-6View Abstract

Modeling the world oil market became a widespread concern after the Arab oil embargo of 1973-74 and the resulting four-fold increase in the price of crude oil. By the late seventies, when the Energy Modeling Forum began its study of world oil models, at least thirty publicly available models were in existence. The pace of development of new models has slowed somewhat in the eighties, a result of reduced funding for energy studies and probably a better appreciation within the modeling community of the difficulties inherent in the activity.

Cost Effectiveness of Future Fuel Economy Improvements

Carmen Difglio, K.G. Duleep, and David L. Green

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-7View Abstract

U.S. petroleum use today is 2 million barrels per day lower than it would have been if automobile fuel economy had not improved since 1975. This paper explores the potential for and cost of further increases in domestic passenger car fuel economy using market-ready technologies and sales mix shifts. Using technology already included in manufacturers' production plans and based on consumers' willingness to pay for increased fuel economy, domestic auto mpg could be increased from the 1987 level of 27 mpg to 31.6 mpg in 1995 without reducing vehicle size or performance from 1987 levels. By2000, 34.3 mpg can be justifed on the same basis. A higher level, 36.4 mpg, is cost-effective, based on fuel cost savings over the entire expected vehicle life. The maximum level achievable with the technology included in this analysis is 39.4 mpg, but this level would not be cost-effective. Sales mix shifts stimulated by price subsidies for efficient cars and surcharges on inefficient models can cause about I or 2 mpg of higher fuel economy before becoming too costly.

On the Economics of Cogeneration: Pricing and Efficiency in Government Owned Utilities

Jae-Cheol Kim and Byong-Hun Ahn

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-8View Abstract

Cogeneration has been gaining increasing importance in the pro-vision of electric power. When a utility purchases electricity produced by independent cogenerators and resells it to consumers, the question of whether or not a certain payment schedule of purchased power is "just and reasonable" becomes an immediate concern to each party concerned--the utility, cogenerators and possibly regulatory agencies.The U.S. regulatory agencies generally have endorsed avoided cost pricing since the passage of the Public Utility Regulatory Policies Act (PURPA) in 1978, the rule requiring that the utility pay avoided costs--the difference between total costs incurred by the utility before and after cogenerators' production. In Korea, on the other hand, a different rule has been implemented in pricing hydroelectric power purchased by the Korea Electric Power Corporation (KEPCO), Korea's only electric utility company from Korea Water Resources Corporation, a multi-reservoir dam corporation. The latter is currently paid based on actual costs incurred by its individual hydroelectric plants.

Integration of Short and Medium/Long Term Planning in the Indian Power Sector

Kapil Thukral, S. Ramesh and Bindu Kaul

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-9View Abstract

The power supply situation in India is characterized by shortages. In response to this situation, many industrial consumers have invested in captive generation facilities for their own use. Although the use of small, expensive, diesel-based captive generator sets may be rational from the viewpoint of the industrial entrepreneurs, their use is not the least-cost option for the Indian economy.

Forecasting the Demand for Electricity in Saudi Arabia

Mohammed A. Al-Sahlawi

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-10View Abstract

Electric power in Saudi Arabia is an essential tool for modern economic development. Thus, forecasting electricity demand is vital for planning and investment purposes. In estimating future electricity demand, it is important to assure high responsibility that there will be no supply shortages. Nonparametric analysis techniques like bootstrap, the jackknife, and cross-validation are becoming increasingly popular in the estimation of probability density function of a variable or its function (see Efron (1979) and Efron and Gong (1983)).

A Structural Decomposition Analysis of Changes in Energy Demand in Taiwan: 1971-1984

Chia-Yon Chen and Adam Rose

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-11View Abstract

Taiwan represents an interesting case study of a nation that has been able to adapt to the energy crisis remarkably well, registering sustained economic growth despite increased oil import expenditures. Certain characteristics of Taiwan's economy set it apart from a number of other developing countries. First, Taiwan's economy is very closely inter-linked with international markets. It is a major exporter of goods, and it has had to rely heavily on imports of energy since its indigenous energy resources are so meager. Second, the nation has had an unusually high rate of growth over the past 30 years. For example, Taiwan's GNP grew at an average rate of 9.1 percent per year during the period 1952-1980, as opposed to growth rates of generally below 5 percent experienced by many other LDCs during that period.

Do Volatile Oil Prices and Consumer Adjustment Costs Justify An Additional Petroleum Tax?

Franz Wirl

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-12View Abstract

A number of papers have considered different reasons for defending or refuting additional crude oil taxation directly or indirectly via an import duty. Hogan-Rahmani (1987) refer to "national security of supply" in advocating an oil import fee. This relates to another work of the authors (see Hogan-Rahmani-Jorgenson-Cooper (1988)), in which they state that energy demand (and in particular U.S. oil dependence) will dramatically rise due to prevailing low crude oil prices. An extensive discussion of this controversial issue has gone on in this journal, e.g., see Wright (1988), Singer (1988), Huntington (1988) reviewing the DOE report on Energy Security and the "American Debate" by Curlee, Tussing and Vactor (1988), Nesbitt and Choi (1988), and the defense of Broadman and Hogan (1988). Bizer and Stuart (1987) address a different aspect of an oil import fee, namely as an instrument of public finance. However, they dismiss import duties as an inefficient instrument for raising revenues.

Flexibility Benefits of Demand-Side Programsin Electric Utility Planning

Eric Hirst

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-13View Abstract

Electric utilities face a variety of uncertainties that complicate their long-term resource planning and acquisition. Many utilities deal with these uncertainties by pursuing flexible strategies that allow changes to be made incrementally with little difficulty and at low cost. Thus, utilities today avoid construction of large, baseload power plants because of their long construction times and high capital costs. On the other hand, utilities view combustion turbines as flexible because they have small unit sizes, take only a few years to build, are inexpensive, and can later be converted to combined-cycle units (to increase capacity and improve performance). Energy-efficiency and load-management programs, because of their inherently small unit size and opportunities to adjust participation over time, are attractive for the same reasons.

Estimating the International GNP-Energy Relation: A Further Note

J.R. Moroney, Terry G. Seaks, and Donna P. Vines

DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-14View Abstract

Energy enhances the productivity of capital, labor, and other factors of production, and generally promotes higher living standards. International cross-sectional studies of aggregate output per capita are often hampered by the absence of qualitatively comparable capital and labor services. And numerical measures of cross-country differences in technology are notoriously scarce, primarily because technological differences (at a macro level) are a pretty vague concept. Thus, it is often desirable to draw a simple relationship between broad international aggregates such as GNP and energy per capita.