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Chapter 7 - The Cost of Decommissioning U.S. Reactors: Estimates and Experience

Gene R. Heinze Fry

Year: 1991
Volume: Volume 12
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol12-NoSI-7
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Abstract:
Decommissioning is in its infancy, but our cost experience includes several dozen small, experimental reactors plus the 72 MWe Shippingport reactor. Decommissioning is only beginning at large reactors, but the insights already accumulated allow some use of this experience in future estimates. In this chapter, Gene Heinze Fry compares generic cost estimates plus the data for a total of 21 closed U.S. reactors. Despite the common assumption about the efficiencies that will come with more decommissioning experience, Fry finds a complete lack of scale economies. This could have implications for rates of collection, sufficiency of accumulated funds, and equity issues tied to future generations.



Ethanol Production and Gasoline Prices: A Spurious Correlation

Christopher R. Knittel and Aaron Smith

Year: 2015
Volume: Volume 36
Number: Number 1
DOI: 10.5547/01956574.36.1.4
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Abstract:
Ethanol made from corn comprises 10% of U.S. gasoline, up from 3% in 2003. This dramatic increase was spurred by recent policy initiatives such as the Renewable Fuel Standard and state-level blend mandates and supported by direct subsidies such as the Volumetric Ethanol Excise Tax Credit. Some proponents of ethanol have argued that ethanol production greatly lowers gasoline prices, with one industry group claiming it reduced gasoline prices by 89 cents in 2010 and $1.09 in 2011. The 2010 figure has been cited in numerous speeches by Secretary of Agriculture Thomas Vilsack. We show that these estimates were generated by implausible economic assumptions and spurious statistical correlations. To support this last point, we use the same statistical models and find that ethanol production "decreases" natural gas prices, but "increases" unemployment in both the U.S. and Europe. We even show that ethanol production "increases" the ages of our children. Overall, we see no compelling reason to believe that the effect of ethanol use on gasoline prices has been more than $0.10 per gallon.



Oil Price Shocks and the U.S. Stock Market: Do Sign and Size Matter?

Zeina Alsalman Ana María Herrera

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.zals
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Abstract:
We investigate the effect of oil price innovations on the U.S. stock market using a model that nests symmetric and asymmetric responses to positive and negative oil price innovations. We find no evidence of asymmetry for aggregate stock returns, and only very limited evidence for 49 industry-level portfolios. Moreover, these asymmetries do not match up well with conventional views regarding en-ergy-dependent sectors of the economy. Instead, asymmetries are more likely driven by the effect of oil price innovations on expected and/or realized demand. We inquire whether the size of the shock matters in that doubling the size of the shock more (or less) than doubles the size of the response, finding that the effect of a 2.s.d innovation is just about double the magnitude of the impact of a 1.s.d innovation. Furthermore, we find no support for the conjecture that shocks that exceed a threshold have an asymmetric effect on stock returns.



The U.S. Dollar Exchange Rate and the Demand for Oil

Selien De Schryder and Gert Peersman

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.ssch
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Abstract:
Using recent advances in panel data estimation techniques, we find that an appreciation of the U.S. dollar exchange rate leads to a significant decline in oil demand for a sample of 65 oil-importing countries. The estimated effect turns out to be considerably larger than the impact of a shift in the global crude oil price expressed in U.S. dollar. This finding appears to be the consequence of a stronger pass-through of changes in the U.S. dollar exchange rate to domestic end-user oil products prices relative to changes in the global crude oil price. Furthermore, we demonstrate the relevance of U.S. dollar fluctuations for global oil price dynamics.



Petro-Nationalism: The Futile Search for Oil Security

James M. Griffin

Year: 2015
Volume: Volume 36
Number: Adelman Special Issue
DOI: 10.5547/01956574.36.SI1.jgri
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Abstract:
This paper takes the contrarian viewpoint that petro-nationalist oil security policies by oil consuming nations are likely to be ineffectual, very costly, and politically destabilizing internationally. Because the world oil market is one big bathtub, oil security is a public goods problem with a worldwide scope. Thus cooperative solutions are essential. Particularly troublesome are bilateral supply agreements and efforts to achieve oil autarky, which aim specifically at achieving a political or economic advantage vis-a-vis other oil consuming nations. These misguided actions are likely to trigger politically destabilizing oil resource competition among major oil consuming nations.



Structure Matters: Oil Markets Enter the Adelman Era

Philip K. Verleger Jr.

Year: 2015
Volume: Volume 36
Number: Adelman Special Issue
DOI: 10.5547/01956574.36.SI1.pver
View Abstract

Abstract:
The 2014/2015 oil price collapse surprised the many economists who have published brilliant econometric explanations of oil price behavior. The sharp decline would not have caught Morris Adelman unawares. Professor Adelman's lifelong research focused on the link between market structure and price behavior. His seminal work on industry structure, beginning with grocery retailer A&P, has provided a framework that can be used to explain oil price fluctuations that have occurred over the past four decades. His approach may not be as accurate as the elegant econometric models that dominate today's literature but it does have one clear advantage: it provides far greater clarity on the way forward.



The Impacts of Lower Natural Gas Prices on Jobs in the U.S. Manufacturing Sector

Wayne Gray, Joshua Linn, and Richard Morgenstern

Year: 2019
Volume: Volume 40
Number: Number 5
DOI: 10.5547/01956574.40.5.wgra
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Abstract:
The recovery of the U.S. manufacturing sector following the 2008-2009 economic recession coincided with a sharp drop in natural gas prices. To determine whether a causal connection in fact exists, we use confidential plant-level data for 1972-2012 to estimate the employment effects of changes in natural gas and other energy prices. Previous analyses have used aggregated data and failed to control for multiple drivers of employment dynamics, such as other input costs. We show that controlling for these factors substantially diminishes the effects of natural gas and electricity prices on manufacturing employment. Accounting for the direct effects of natural gas prices as well as the indirect effects via electricity prices, we estimate that the decline in natural gas prices between 2007 and 2012 raised overall manufacturing employment by 0.6 percent, and for gas-intensive industries, by 1.8 percent.



How Do Oil Shocks Impact Energy Consumption? A Disaggregated Analysis for the U.S.

Thi Hong Van Hoang, Syed Jawad Hussain Shahzad, Robert L. Czudaj, and Javed Ahmad Bhat

Year: 2019
Volume: Volume 40
Number: The New Era of Energy Transition
DOI: 10.5547/01956574.40.SI1.thoa
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Abstract:
This paper investigates the interaction between energy consumption and oil shocks in the U.S. from 1974 to 2018 using monthly data. Its contributions rely on the double disaggregation of energy consumption and oil shocks in a time-varying context. Oil shocks are disaggregated into oil supply, oil demand and aggregated demand shocks following the method of Kilian (2009). Energy consumption is disaggregated according to the production source in distinguishing between renewable and non-renewable energy consumption (hydropower, geothermal, wood, waste, coal, natural gas and petroleum). The impulse response function results show that renewable energy consumption responds the most to aggregate demand and oil supply shocks while for non-renewable energy consumption, it is oil demand shocks. The dynamic connectedness results show that oil supply and demand shocks spillover the most to hydropower consumption while aggregate demand shocks spillover the less. However, these relationships change over time and recommend the flexibility of energy policies.



Do Jumps and Co-jumps Improve Volatility Forecasting of Oil and Currency Markets?

Fredj Jawadi, Waël Louhichi, Hachmi Ben Ameur, and Zied Ftiti

Year: 2019
Volume: Volume 40
Number: Special Issue
DOI: 10.5547/01956574.40.SI2.fjaw
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Abstract:
This paper aims at modeling and forecasting volatility in both oil and USD exchange rate markets using high frequency data. We test whether extreme co-movements (co-jumps) between these markets, as well as intraday unexpected news, help to improve volatility forecasting or not. Accordingly, we propose different extensions of Corsi (2009)'s model by including co-jumps and news. Our analysis provides two interesting findings. First, we find that both markets exhibit significant co-jumps driven by unexpected macroeconomic news. Second, we show that our model outperforms Corsi (2009)'s model and provides more accurate forecasts. In particular, while co-jumps constitute a key variable in forecasting oil price volatility, the unexpected news is relevant to forecasts of USD exchange rate volatility.



Did U.S. Consumers Respond to the 2014-2015 Oil Price Shock? Evidence from the Consumer Expenditure Survey

Patrick Alexander and Louis Poirier

Year: 2020
Volume: Volume 41
Number: Number 1
DOI: 10.5547/01956574.41.1.pale
View Abstract

Abstract:
The impact of oil price shocks on the U.S. economy is a topic of considerable debate. In this paper, we examine the response of U.S. consumers to the 2014-2015 negative oil price shock using representative survey data from the Consumer Expenditure Survey. We propose a difference-in-difference identification strategy based on two factors, vehicle ownership and gasoline reliance, which generate variation in exposure to oil price shocks across consumers. Our findings suggest that exposed consumers significantly increased their spending relative to non-exposed consumers when oil prices fell, and that the average marginal propensity to consume (MPC) out of gasoline savings was above 1. Across products, we find that consumers increased spending especially on transportation goods and non-essential items.




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