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Energy Journal Issue

The Energy Journal
Volume 14, Number 1

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Modelling World Oil Supply

Morris A. Adelman

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-1View Abstract

David Wood and I had many conversations on this subject, and he encouraged me to prepare a paper for a September 1989 session of the Energy Modelling Forum. It has been enlarged and rewritten, to incorporate working and published papers completed since then, thanks in no small measure to David Wood's friendship and support.

Measuring the Energy Efficiency and Productivity Impacts of Embodied Technical Change

Ernst Berndt, Charles Kolstad and Jong-Kun Lee

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-2View Abstract

Using data from the manufacturing sectors in the United States, Canada and France, we distinguish the energy efficiency and productivity impacts of embodied and unembodied technological progress. We find that technological progress embodied in new equipment is responsible for a surprisingly small proportion of productivity growth. We conclude the paper by interpreting this finding.

Growth and Welfare Losses from Carbon Emissions Restrictions: A General Equilibrium Analysis for Egypt

Charles Blitzer, Richard Eckaus, Supriya Lahiri, and Alexander Meeraus

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-3View Abstract

This paper assesses the economic effects of carbon emission restrictions in Egypt.Like other studies, it is an exemplification of some of the economic possibilitiesunder various conditions. However, it extends the domain of possibilities andsuggests some issues that have not been considered in other studies.It is demonstrated clearly that, while annual emissions constraints have only a modest effect on long-run economic growth rates, they have substantial effect on the achieved levels of GDP and welfare. These results do not change much, even with backstop and unconventional technologies or change in discounting. However, postponing the imposition of constraints does have a significant effect, as does changing the form of the constraints to one based on accumulated emissions.

An Analysis of the Macro-Economic Costs of Various CO2 Emission Control Policies in Japan

Noriyuki Goto and Takamitsu Sawa

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-4View Abstract

This study attempts quantitative and comparative analyses of the expected macro economic impacts of various carbon dioxide (CO2) emission control policies. The analytical tool is a long-term general equilibrium model that integrates the behaviors of competitive energy sectors with macro-economic activity. We find that, if the economy adjusts efficiently, the macro-economic costs incurred by CO2emission controls are not very large. For example, the cost is estimated to be less than 0.5% of GNP on average during the next .50 years to freeze the annual rate of CO2 emissions at the 1990's level. It is also shown that, among various types of control policies, the introduction of a carbon tax is the most effective method to achieve a proposed target.

Methodological Advances in Energy Modelling: 1970-1990

James M. Griffin

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-5View Abstract

Both the theory and practice of energy modelling have made phenomenal advances over the last 20 years. After providing a brief description of the state of energy modelling circa 1970, this paper identifies four major methodological advances profoundly affecting energy modelling. In the area of energy demand modelling, the translog and other generalized functional forms have proven readily adaptable to questions of interfuel substitution and energy/non-energy substitution. Additionally, discrete choice models, particularly the multinomial logit models, have provided a conceptually appealing framework within which to model appliance choice. The third advance has come in both the frequency and sophistication of use of panel data sets, which offer a much richer set of price and income variation. Finally, in the area of energy supply modelling, dynamic optimization models coupled with greater reliance on engineering information has lead to steady improvements in this area.

OECD Oil Demand Dynamics: Trends and Asymmetries

William W. Hogan

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-6View Abstract

Oil market data of the 1980s reject a simple, symmetric reduced-form model of dynamic oil demand in the OECD countries. Tests of price asymmetric long-run demand models produce ambiguous results. The pooled time series estimations find near unitary output elasticities, and reject linear demand models in favor of constant elasticity formulations. Despite large differences in product prices and crude prices, the data cannot reject use of a crude price model fir aggregate oil demand. A reduced-form model symmetric in product prices but with technology trends for non-price oil conservation compares favorably with other formulations, and provides slightly lower projections of future oil demand intensity. However, even these lower econometric projections imply substantial increases in aggregate oil demand, increases which exceed those found in the conventional judgmental estimates.

The Economic Impact of the Clean Air Act Amendments of 1990

Dale W. Jorgenson and Peter J. Wilcoxen

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-7View Abstract

The purpose of this paper is to quantify the economic impact of the Clean Air Act Amendments of 1990. The long-run cost of environmental regulations enacted prior to 1990 amounts to 2.59% of the U.S. national product. The new legislation will reduce the national product by a further 0.6% when the impact is complete. Electric utilities and primary metals industries will be especially hard hit by this legislation.

Statistical Issues in the Assessment of Undiscovered Oil and Gas Resources

Gordon M. Kaufman

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-8View Abstract

Prior to his untimely death, my friend Dave Wood gave me wise counsel about how best to organize a paper that would describe the uses of statistics in oil and gas exploration. A preliminary reconnaissance of the literature alerted me to the enormous range of topics that might be covered. Geology, geophysics with particular attention to seismology, geochemistry, petroleum engineering and petroleum economics-each of these disciplines plays an important role in petroleum exploration and each weaves statistical thinking into its fabric in a distinctive way. An exhaustive review would be book length. Dave and I agreed that a timely review paper of reasonable length would (1) illustrate the range of statistical thinking of oil and gas explorationists; (2) concentrate on topics with statistical novelty, show how statistical thinking can lead to better decision making and let the reader know about important controversies that might be resolved by better use of statistical methods; (3) focus on topics that are directly relevant to exploration decision making and resource estimation. In response to Dave's sensible suggestions, the U. S. Department of Interior's 1989 assessment of U.S. undiscovered oil and gas will be a tour map for a short trip through a large territory of statistical methods and applications. If Dave were here to appraise this review, I know it would be better than it is.

Energy and Capital: Further Exploration of E-K Interactions and Economic Performance

Catherine Morrison

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-9View Abstract

This paper explores some interactions between energy and capital that affect firms' productive performance through indirect effects of energy price changes. Different capital stocks (including high-tech capital) and different U.S. manufacturing industries (including high and low energy- and capital-intensive industries) are examined. This allows evaluation of cross-effects, expressed as the impact of changing capital composition on energy conservation (computer induced energy conservation) and energy price effects on capital returns (including composition, utilization and scale). The resulting effects on productivity growth are then considered, through the impact of energy price changes both on the demand and cost share of energy, and on the measured returns to different types of capital.

Comparing Greenhouse Gases for Policy Purposes

Richard Schmalensee

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-10View Abstract

In order to derive optimal policies for greenhouse gas emissions control, the discounted marginal damages of emissions from different gases must be compared. The greenhouse warming potential (GWP) index, which is most often used to compare greenhouse gases, is not based on such a damage comparison. This essay presents assumptions under which ratios of gas-specific discounted marginal damages reduce to ratios of discounted marginal contributions to radiative forcing, where the discount rate is the difference between the discount rate relevant to climate-related damages and the rate of growth of marginal climate-related damages over time. If there are important gas-specific costs or benefits not tied to radiative forcing, however, such as direct effects of carbon dioxide on plant growth, there is in general no shortcut around explicit comparison of discounted net marginal damages.

Adjustment Costs and Returns to Scale: Some Theoretical and Empirical Aspects

G. Campbell Watkins

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-11View Abstract

In specifying third generation models of factor demands, adjustment costs are frequently treated as a function of net rather than gross investment. Such specifications assume replacement investment is frictionless and in equilibrium adjustment costs are zero. Recognition that adjustment costs may reflect not only net but also gross investment leads to a more complex model. But the revised model implies increasing long-run average costs. Such a model can still be specified to impose constant long-run average costs, or constant returns to scale. The latter condition is often desirable to avoid confusion in estimating technological progress. However, empirical work suggests that conventionally labelled expressions of adjustment costs embrace other influences. Proper measurement and identification of such costs may well require more finely tuned approaches.