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

Franz Wirl

Year: 1990
Volume: Volume 11
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No1-12
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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.



Future World Oil Prices and Production Levels: A Comment

Franz Wirl

Year: 1990
Volume: Volume 11
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No3-7
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Abstract:
In a recent paper published in this journal, Marsballa and Nesbitt (1986) present an economist's point of view of OPEC pricing. In particular, they compute profit maximizing price strategies using a dynamic representation of the world oil market. The purpose of this paper is not to dispute the calculated numbers but to question the qualitative validity of the calculated optimal paths. The claim of this note is that it is very unlikely to generate smooth paths -- e.g. the price strategies shown in their paper -- the presented framework.



Irreversible Price-Induced Efficiency Improvements: Theory and Empirical Application to Road Transportation

I.O. Walker and Franz Wirl

Year: 1993
Volume: Volume14
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No4-12
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Abstract:
Energy demand since 1986 seems inconsistent with the notion of constant income and price elasticities reported in the literature. Energy demand growth remained sluggish despite the simultaneous substantial reduction in real fuel costs and increases in real income. This investigation differentiates, as it were, two different price effects that should explain this apparent asymmetry in energy demand. The first effect is embedded in the technical efficiency and therefore largely irreversible. The second effect revolves around consumers' decisions and hence is reversible. This dichotomy of the price effect provides a suitable framework to study energy demand (in this instance, road transport). Moreover, the projections and policy recommendations following from this framework differ from the standard symmetric specification. Moderate price increases will affect consumers' behaviour, while only sufficiently high gasoline prices will trigger further efficiency improvements. The present low growth rates of energy demand mask a much higher growth at the service level, therefore energy demand growth may accelerate as these efficiency gains die out (if price levels or price expectations remain low).



Lessons from Utility Conservation Programs

Franz Wirl

Year: 2000
Volume: Volume21
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No1-4
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Abstract:
This paper considers the design, incentives and effectiveness of U.S. demand side management (DSM) programs and tries to explain why this ambitious, almost unanimously embraced initiative failed. Problems on the demand side result from consumers' private information that implies that substantial principal-agent slippage must accompany any conservation incentive the utility offers to the consumer. Moreover, the regulatory incentives induce the American utility to select inefficient programs. Therefore, the utility has little to gain from deterring such strategic reactions and cheating by consumers. As a consequence, the reported conservation exists largely on paper but not in reality. This ex-post assessment is important for two reasons. First, European countries (Scandinavia, Germany, Austria and others) have been eager to repeat this American regulatory 'success'. Second, the problems addressed in this paper would apply to another round of conservation programs induced by the concern about global warming.



The Impact of OPEC Conference Outcomes on World Oil Prices 1984-2001

Franz Wirl and Azra Kujundzic

Year: 2004
Volume: Volume 25
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No1-3
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Abstract:
This paper investigates how far OPEC influences world oil markets. We ask the question: What is the impact of the decisions of the OPEC Conference, the supreme authority of the Organization of Petroleum Exporting Countries, on world oil prices? Extracting the Conference s decisions from the communiqu�s of fifty meetings from 1984-2001, these decisions were compared with the subsequent market developments. The result is that this impact is weak at best, and if at all then restricted to meetings recommending a price increase. However, the opposite claim (found in the literature) - the Conference is simply following the market - was also not supported either. Another interesting observation is the little autocorrelation between the decisions of the Conference. This suggests that the ministers decisions accommodate quickly and efficiently recent events.



Incentivizing Energy Efficiency under Private Information: The Social Optimum

Franz Wirl

Year: 2019
Volume: Volume 40
Number: Number 6
DOI: 10.5547/01956574.40.6.fwir
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Abstract:
This paper addresses how far public initiatives should try to eliminate the energy efficiency gap if consumers hold private information about their willingness to pay for efficiency. The major finding is that even socially optimal efficiency programs should only close a fraction of the gap. This conclusion has to be strengthened if the external costs of energy were internalized, because an intervention is then only justified for low costs of public funds and very large payback gaps. Furthermore, the realistic assumption of private information implies that the highest subsidies must be paid to efficient types, which turns incentives based on perfect information upside down.





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