Impact of price variations on the consumption of electrical energy

This analysis is directed at looking at the impact of changing prices on the sectoral demand for electrical energy in the United States. By using a cross correlation test for unidirectional causality, it is shown that, in the case of the residential demand, the commercial demand and the industrial demand, the quantity consumed is affected by changing prices. The reverse is also true. Since bidirectional causality cannot be statistically rejected, any estimation of the demand for electrical energy must be peformed in a simultaneous framework to avoid specification errors and their associated problems.     

Modeling the high frequency demand for energy

This paper looks at the nature and length of the impact that prices and economic activity have on the demand for motor gasoline and distillate fuel oil in the United States. A general approach is presented and implemented to aid any energy analyst in gaining insights into the modeling activity. The results suggest that price changes affect the quantity of motor gasoline and distillate fuel oil demanded for as long as two years after an initial change, while changing personal income has an impact for about a year.     

The production of crude oil and natural gas

This paper is directed at examining the impact of changing prices on the level of production of crude oil and natural gas in the United States. By using a cross-correlation test for unidirectional causality it is clearly demonstrated that, for both crude oil and natural gas, domestic production is affected by changing prices. The implications are clear. The decontrol of the price of crude oil and the deregulation of natural gas prices will lead to additional production in the near term.     

The role of investment for energy conservation : Future Japanese economic growth

This article describes a variant of the Cobb-Douglas production function (the Rasche-Tatom model) which explicitly includes an energy factor. The model is applied to the Japanese economy to investigate the role of investment for energy conservation. First, the impact of rising energy prices on potential GNP and productivity is shown. Second, it is suggested that the Japanese economy will achieve a high growth rate (5.0–5.5%) in the coming five years through substitution of capital for energy, ie investment for energy conservation. An international comparison of the models is also discussed.     

Convergence of energy productivity in Australian states and territories: Determinants and forecasts

The Australian government has recently launched a National Energy Productivity Plan that calls for a 40% increase in energy productivity (economic output divided by energy use) before 2030. Improving energy productivity would help boost economic competitiveness, reduce energy costs, and reduce carbon dioxide emissions in Australia. Understanding energy productivity dynamics at the state level is essential for the success of this program. This research analyses the convergence path of energy productivity in Australian states and territories. Club convergence analysis applied to data over the period 1990–2015 reveals two converging energy productivity clubs. Initial energy productivity, industry structure, and automobile fuel prices are important determinants of higher energy productivity. Based on Australian state energy productivity forecasts to 2030, New South Wales and Victoria will be the forerunners in maintaining higher energy productivity in 2030. Australia will not achieve a 40% increase in energy productivity before 2030 without significant changes to its fuel mix and industry structure.     

Determinants of energy productivity in 39 countries: An empirical investigation

This paper uses three types of analysis to investigate the drivers of energy productivity changes occurring in 39 countries during 1995–2009. We find that increases in sectoral energy productivity were the primary driver behind economy-wide energy productivity improvements. Structural economic shifts away from industry and towards service-oriented sectors played a lesser role in aggregate energy productivity improvements. Nations with similar demographic and economic characteristics showed similar levels of energy productivity and rates of improvement. Most notably, former communist countries and nations undergoing economic liberalization exhibited the highest rate of improvement—although they are still less energy productive than developed nations. Moreover, the econometric analysis reinforces the long-standing hypothesis that higher levels of income per capita and higher energy prices are associated with greater energy productivity, while a greater share of output from industry is associated with lower energy productivity levels. In particular, higher energy prices and income levels are associated with improvements in sectoral energy productivity.     

The impact of price variation on the production of crude oil and natural gas

This paper is directed at examining the impact of changing prices on the level of production of crude oil and natural gas in the United States. By using a cross correlation test for unidirectional causality, it is clearly demonstrated that for both crude oil and natural gas, domestic production is affected by changing prices. The implications are clear. The decontrol of the price of crude oil and the deregulation of natural gas prices will lead to additional production in the near term.     

Sectoral energy demand in Canadian manufacturing industries

Several studies have been undertaken which analyse the price elasticities of demand for energy in the aggregate manufacturing sectors of different countries. This paper investigates the impact of changing energy prices on factor demands in each of the many subsectors of manufacturing in Canada. Translog cost functions are estimated and the energy price elasticities of demand are derived. These elasticities enable us to pinpoint those sectors that will have the most difficulty in adapting to high energy prices.     

Energy productivity and Chinese local officials’ promotions: Evidence from provincial governors

Improving energy productivity is one of the most cost-effective ways to achieve a sustainable development target. The existing literature has shown some factors that have driven the improvement in China’s energy productivity. However, these studies do little to tackle the role of Chinese local officials. Political promotions can be seen as the most important career incentive for Chinese local officials. Hence, we intend to study whether energy productivity affects Chinese local officials’ promotions in this paper. The data of position changes for the 31 provincial governors during 1978‐2012 are utilized. We adopted probit models to empirically examine the correlation between provincial governors’ political promotions and energy productivity. The empirical results demonstrate that (1) energy productivity has a significantly positive impact on provincial governors’ political promotions in China, meaning that the provincial governors have the momentum to improve energy productivity; and (2) the effect of energy productivity on provincial governors’ political promotions has evolved, dynamically changing along with the transformation of the economic growth mode and the adjustment of the local officials’ promotion mechanism. The results are helpful in understanding the drivers of the improvement in China’s energy productivity and provide insightful implications for conducting energy policy in China.     

The role of energy productivity in U.S. agriculture

This paper investigates the role of energy on U.S. agricultural productivity using panel data at the state level for the period 1960–2004. We first provide a historical account of energy use in U.S. agriculture. To do this we rely on the Bennet cost indicator to study how the price and volume components of energy costs have developed over time. We then proceed to analyze the contribution of energy to productivity in U.S. agriculture employing the Bennet–Bowley productivity indicator. An important feature of the Bennet–Bowley indicator is its direct association with the change in (normalized) profits. Thus our study is also able to analyze the link between profitability and productivity. Panel regression estimates indicate that energy prices have a negative effect on profitability in the U.S. agricultural sector. We also find that energy productivity has generally remained below total farm productivity following the 1973–1974 global energy crisis.     

Energy demand and interfuel substitution in the transportation sector

The analysis in this paper is directed at examining the effect of energy prices on the quantity of energy demanded in the transportation sector in the United States. For motor gasoline, the suggestion is that vehicle miles travelled as well as the stock of automobiles respond to changing motor gasoline prices. For other fuels consumed in this sector, the quantity of energy consumed does respond to energy prices as well as the level of economic activity. The magnitude of the response is typically small.     

Adjusting productivity measures for CO2 emissions control: Evidence from the provincial thermal power sector in China

We examine productivity changes by the types of environmental regulations used to control CO₂ emissions in the provincial, thermal power sector of China from 2009 to 2016. We derive a Törnqvist-type productivity index in which CO₂ emissions are undesirable outputs. The shadow price of CO₂, required for calculating the index, is estimated based on the duality between a revenue and a directional output distance function. Productivity changes are measured using both estimated shadow prices and the actual trading prices of CO₂ in six pilot emissions trading systems. We find that productivity measurement is highly dependent on the choice of CO₂ prices. We also investigate the impact of emission intensity and emissions per se on productivity measurement. We show that productivity measurement depends on the choice of environmental standard.     

Historical energy price shocks and their changing effects on the economy

The purpose of this paper is to identify the changes in the impact of energy shocks on economic activity — with an interest in assessing if an economy's vulnerability and resilience to shocks improved with economic development. Using data on the United Kingdom over the last three hundred years, the paper identifies supply, aggregate demand and residual shocks to energy prices and estimates their changing influence on energy prices and GDP. The results suggest that the impacts of supply shocks rose with its increasing dependence on coal, and declined with its partial transition to oil. However, the transition from exporting coal to importing oil increased the negative impacts of demand shocks. More generally, the results indicate that improvements in vulnerability and resilience to shocks did not progress systematically as the economy developed. Instead, the changes in impacts depended greatly on the circumstances related to the demand for and supply of energy sources. If these experiences are transferable to future markets, a transition to a diversified mix of renewable energy is likely to reduce vulnerability and increase resilience to energy price shocks.     

Fuel substitution and price response in UK industry

An investigation is presented of the relationship between energy use and economic activity in the main UK industrial sectors in the period 1954–1975. We first summarize the historical behaviour of energy use and activity in the industrial sectors. We also examine to what extent changes in energy/GDP ratio are attributable to decreasing energy consumption/output ratios of the different sectors and to what extent they reflect the changing sectoral composition of the economy. Decreasing energy/output ratios, rather than structural change, are found to account for changes in the energy/GDP ratio. We then test the hypothesis that interfuel substitution only can account for the increased energy productivity. Only the results for Food, Drink and Tobacco and Engineering support the hypothesis. Finally we analyse the historical price responses of energy consumption. The results support the view that fuel prices are significant in explaining changes in fuel consumption and in accounting for fuel substitution. However, other variables, such as labour costs, temperature and business cycle fluctuations, contribute to the changes.     

Oil prices,nuclear energy consumption,and economic growth: New evidence using a heterogeneous panel analysis

This paper applies panel data analysis to examine the short-run dynamics and long-run equilibrium relationships among nuclear energy consumption, oil prices, oil consumption, and economic growth for developed countries covering the period 1971–2006. The panel cointegration results show that in the long run, oil prices have a positive impact on nuclear energy consumption, suggesting the existence of the substitution relationship between nuclear energy and oil. The long-run elasticity of nuclear energy with respect to real income is approximately 0.89, and real income has a greater impact on nuclear energy than do oil prices in the long run. Furthermore, the panel causality results find evidence of unidirectional causality running from oil prices and economic growth to nuclear energy consumption in the long run, while there is no causality between nuclear energy consumption and economic growth in the short run.     

Effects of stochastic energy prices on long-term energy-economic scenarios

In view of the currently observed energy prices, recent price scenarios, which have been very moderate until 2004, also tend to favor high future energy prices. Having a large impact on energy-economic scenarios, we incorporate uncertain energy prices into an energy systems model by including a stochastic risk function. Energy systems models are frequently used to aid scenario analysis in energy-related studies. The impact of uncertain energy prices on the supply structures and the interaction with measures in the demand sectors is the focus of the present paper.

For the illustration of the methodological approach, scenarios for four EU countries are presented. Including the stochastic risk function, elements of high energy price scenarios can be found in scenarios with a moderate future development of energy prices. In contrast to scenarios with stochastic investment costs for a limited number of technologies, the inclusion of stochastic energy prices directly affects all parts of the energy system. Robust elements of hedging strategies include increasing utilization of domestic energy carriers, the use of CHP and district heat and the application of additional energy-saving measures in the end-use sectors. Region-specific technology portfolios, i.e., different hedging options, can cause growing energy exchange between the regions in comparison with the deterministic case.     

Role of carbon swap trading and energy prices in price correlations and volatilities between carbon markets

The present paper theoretically and empirically examines the role of carbon swap trading and energy prices in volatilities and price correlations between the EU and Kyoto Protocol emissions trading schemes. A supply and demand based correlation model between EUA and sCER price returns is proposed in detail using inverse Box–Cox type marginal abatement cost (MAC) curves and simple emission reduction volume processes. The model includes financial players' EUA–sCER swap transaction in boom periods of carbon prices using the logit model for EUA and EUA–sCER swap volume correlations, and stronger energy price impacts on EUA prices than sCER prices using a mean-reverting lognormal process for energy prices. The empirical studies using EUA and sCER prices estimate the model parameters, resulting in a positive EUA volume impact on EUA–sCER swap transactions and a positive energy price impact on EUA prices. It is shown that high EUA–sCER price correlations during high EUA price periods stemmed from EUA–sCER swap transactions, whereas high EUA–sCER price correlations during the period of financial turmoil with low EUA prices came from the drop in energy prices. We also show that the leverage effects often observed in security markets exist in both the EUA and sCER markets according to the price–volatility relation.     

The effect of missing data on wind resource estimation

Investment in renewable energy sources requires reliable data. However, meteorological datasets are often plagued by missing data, which can bias energy resource estimates if the missingness is systematic. We address this issue by considering the influence of missing data due to icing of equipment during the winter on the wind resource estimation for a potential wind turbine site in Norway. Using a mean-reverting jump-diffusion (MRJD) process to model electricity prices, we also account for the impact on the expected revenue from a wind turbine constructed at the site. While missing data due to icing significantly bias the wind resource estimate downwards, their impact on revenue estimates is dampened because of volatile electricity spot prices. By contrast, with low-volatility electricity prices, the effect of missing data on revenue estimates is highly significant. The seasonality-based method we develop removes most of the bias in wind resource and revenue estimation caused by missing data.     

Three classes of energy resources

Against the background of changing prices, the author examines three distinct classes of energy resources for the USA from geographical and political points of view. He suggests that careful reappraisal of these categories could lead to future prices which, thought twice those of a year ago, would be lower than the current ‘free market’ prices.     

Autonomous efficiency improvement or income elasticity of energy demand: Does it matter?

Observations of historical energy consumption, energy prices, and income growth in industrial economies exhibit a trend in improving energy efficiency even when prices are constant or falling. Two alternative explanations of this phenomenon are: a productivity change that uses less energy and a structural change in the economy in response to rising income. It is not possible to distinguish among these from aggregate data, and economic energy models for forecasting emissions simulate one, as an exogenous time trend, or the other, as energy demand elasticity with respect to income, or both processes for projecting energy demand into the future. In this paper, we ask whether and how it matters which process one uses for projecting energy demand and carbon emissions. We compare two versions of the MIT Emissions Prediction and Policy Analysis (EPPA) model, one using a conventional efficiency time trend approach and the other using an income elasticity approach. We demonstrate that while these two versions yield equivalent projections in the near-term, that they diverge in two important ways: long-run projections and under uncertainty in future productivity growth. We suggest that an income dependent approach may be preferable to the exogenous approach.