Adjustment and energy: Dangers of a demand-side obsession

Short-term energy adjustment, based on the now-dominant IMF model, is in strong conflict with that required for longer term development and growth. The world economic recovery is threatened by structural, cyclical, and other factors, including the debt problem of developing countries, commodity price surges, and potential energy problems. Short-term adjustment impacts on longer-term policy and investment in the energy sector, assuring that economic recovery will demand rapid increases in oil imports for oil-importer developing countries. National policies in industrial countries to squeeze energy have been very successful, but have likely deepened the recession and intensified some cyclic aspects of investment and development. Oil supply is still strongly influenced by OPEC, and only through heightened appreciation of recession-recovery cycles will the tremendous importance of the potential resources of oil-importer developing countries be recognized - a first step towards the inevitably multilateral framework needed for their development.     

Oil price and inflation

An oil price rise would be expected to result in an immediate reduction by about 20% in the standard of living of the oil importing countries and a corresponding increase in that of the oil exporters. Since the price rises experienced during recent years have not been reflected in wage reductions, the result has been high, long-lasting inflation, which this paper shows will increase in the coming years to more than 20%. Measures taken by the oil importers include energy saving, which results in a still lower standard of living. If, instead, the industrialized countries increase production by increasing energy consumption and improving production efficiency, the effect of a rise in oil price will be compensated for in a few years.     

The persistence of energy poverty: A dynamic probit analysis

This paper contributes to the growing literature on energy poverty in developing countries. We use a dynamic probit estimator on three rounds of panel data from urban Ethiopia to estimate a model of the probability of being energy poor and to investigate the persistence of energy poverty. We also study the impact of energy price inflation, which Ethiopia experienced during 2007–2009, on energy use and energy poverty. We find strong evidence of state dependence in energy poverty. A household that is energy poor in one round is up to 16% more likely to be energy poor in the subsequent round. Dynamic probit regression results also suggest that an increase in the price of kerosene – the most important fuel for the urban poor – drives households into energy poverty. A fractional response estimator for panel data, which estimates the impact of energy prices on the proportion of energy obtained from clean sources, also supports the finding on the adverse impact of energy price inflation. Households responded to the significant rise in the price of kerosene by consuming a large amount of charcoal, which has been documented to have serious environmental, climate, and health consequences. Our results have significant implications for policies formulated to reduce energy poverty, conserve biomass resources, and promote energy transition in developing countries.     

The US dollar and the world oil market

Due to the increasing value of the dollar, world oil prices rose rather than fell relative to the price of OECD exports between 1980 and 1984. The real crude oil price of OECD countries increased by approximately 30% more than its counterpart for the USA. This paper calculates that if OECD oil prices had not risen but followed the trend for US prices, world oil demand in 1984 would have been about 3 million barrels per day — 6.6% higher than otherwise. Two plausible scenarios which assume the same nominal oil price, US inflation rate and OECD growth rate but different values for the dollar are considered. World oil consumption by 1990 could vary by 4 million barrels per day, depending upon shifts in the exchange rates and the value of the dollar. This variation is comparable to the range associated with significant differences in the economic growth rate between now and 1990. The paper shows that shifts in exchange rates could produce changes in oil prices in 1990 comparable to the effects of gradually removing 5 million barrels per day from total oil production by 1990.     

Commodity price pass-through and inflation regimes

Does an increase in the energy and commodity prices drive consumer prices? The energy and commodity markets affect the inflation process through international trade. This poses policy implications for monetary policy to forecast inflation and also smooth the impact of international relative price movements. We investigate the pass-through of a broad range of agricultural and energy commodity prices to inflation across different inflation regimes. Our distinctive regime-varying methodology captures asymmetric response of inflation to the world commodity prices. We establish the first evidence of the pass-through of commodity prices to inflation across different periods of low and high inflation regimes and also stable and unstable inflation regimes. The results show that the duration of staying in an unstable inflation regime is smaller in the commodity markets. Both short-run and long-run pass-through of agricultural, food and energy commodities are higher compared to other commodities. The energy commodity particularly drives the inflation process for advanced economies, emerging economies and also the European Union countries. Overall, the dynamics of inflation and commodity prices change in the inflation environment, pointing to implications for conducting optimal monetary policy.     

The long term implications and constraints of alternate energy policies

The complexity of the current energy situation is such that conventional analysis does not provide sufficient foundation upon which to base energy-policy decisions. We have used an overview perspective in analyzing how a diverse range of phenomena, such as population, price, inflation, transportation, agriculture, international trade and city design, are linked to energy policy. A principle tool used in the study is the hierarchical simulation model SPECULATER.

Contrary to the “conventional wisdom”, present U.S. energy prices are exceedingly low, whether the standard of comparison is the historical level of U.S. energy prices or current energy prices in other countries, which are 3 to 115 times more expensive after correcting for ability to pay. We do not suggest that higher energy prices are not inflationary, but rather that lower energy prices are also inflationary. Widening the analytical scope reveals that the “benefits” of low energy prices are more illusionary than real. What may appear to be an immediate benefit of a particular policy often turns out to be a subsequent disaster. Unless policies are aimed at promoting long-term stability instead of short-term benefit, the difficult decisions we are facing today will seem trivial compared to the agonizing decisions we stand to face in the future.

Simulations using SPECULATER indicate some of the long-term implications of current energy policy. For example, a policy in which gasoline prices decline slightly until 1980 and then increase only with inflation leads to a year 2000 wheat price that is 21% higher than that produced by a policy which advocates an increase in the price of gasoline to $1.00 by 2000. Both policies would still require large imports of oil and, consequently, would push U.S. agricultural system to a point where necessary production levels could only be met by massive increases in capital (both human and monetary), energy and water. Alternatively, an energy policy that would increase gasoline prices to a level similar to that in West Germany (about three times current U.S. prices, after correcting for ability to pay) would result in lower wheat prices, since consumption would be decreased, with concomitant decreases in oil imports and wheat exports.

Failure of policy-makers to support a strong energy policy (culminating in decreased consumption and ultimately general conservation) will result in a diversity of other problems becoming more serious. Capital promises to be a critical factor in the future, as do water, health care service, and the U.S. international trade balance. In short, “cheap” energy is not cheap; energy will be paid for a true price in some roundabout fashion, either in the supermarket, through increased taxes, loss of jobs, lack of health care services, etc.     

The effects of oil price shocks on output and inflation in China

Crude oil price shocks derive from many sources, each of which may bring about different effects on macro-economy variables and require completely different designs in macro-economic policy; thus, distinguishing the sources of oil price fluctuations is crucial when evaluating these effects. This paper establishes an open-economy dynamic stochastic general equilibrium (DSGE) model with two economies: China and the rest of the world. To assess the effects of oil price shocks, the CES production function is extended by adding oil as an input. Based on the model, the effects of four types of oil price fluctuations are evaluated. The four types of oil price shocks are supply shocks driven by political events in OPEC countries, other oil supply shocks, aggregate shocks to the demand for industrial commodities, and demand shocks that are specific to the crude oil market. Simulation results indicate the following: Oil supply shocks driven by political events mainly produce short-term effects on China's output and inflation, while the other three shocks produce relatively long-term effects; in addition, demand shocks that are specific to the crude oil market contribute the most to the fluctuations in China's output and inflation.     

The case for renewables apart from global warming

The outcome of COP15, the conference on climate change in Copenhagen, was the Copenhagen Accord which was recognised by the 193 countries that attended. The Accord set no compulsory limits on carbon emissions, and none of the countries that introduced it – USA, China, India [with Brazil and South Africa] – has signed the Annexe to the Kyoto Agreement, committing them to limit their emissions. Climate change is only of secondary importance to them compared with eradicating poverty. Nevertheless three of these countries are in the lead currently for installing renewables, far ahead of most of those [only 37 out of 187 countries world-wide] who are committed to limiting their emissions. This paper explains why. The main function of renewable energy is to save fuel, thereby reducing energy imports and maintaining security of energy supplies without the need to fight world wars over them. Also, being capital intensive with all the money paid up-front, renewables avoid the price fluctuations that bedevil the oil and other fossil fuel industries. As capacity is doubling every 3 years, renewables prices will come down with savings of scale, so wind power in particular will soon be the cheapest form of power.     

World supplies of petroleum in the 1980s

During the 1970s the non-communist world has weathered, without profound economic disturbance, the oil crisis which developed following the formation of OPEC. This was to a large extent due to the fact that, although the market price of crude had sharply increased, its cost in real terms had remained stable.The factors which mitigated the economic consequences of the oil situation during the last decade are not likely to last throughout the 1980s. It is therefore anticipated that the oil dependent countries will be in a much more difficult position in the immediate future.The conventional approach in studying world energy problems is to begin with the assessment of future energy requirements of individual countries on the one hand and of their energy production based on domestic resources on the other. It is then assumed that, hopefully, the difference between the two figures will be covered by imports of crude.This study tackles the problem the other way around, using as a starting point an estimate of what is likely to be exported by the OPEC group in the 1980s.The conclusion arrived at from an analysis of the political and economic forces operating within OPEC is that OPEC will drastically curtail its exports, maybe by as much as 40%. As a result, the non-communist oil-dependent world will face much more acute and difficult energy problems during the 1980s than it did during the 1970s.     

Determinants of China's energy imports: An empirical analysis

Sustained economic growth in China has triggered a surge of energy imports, especially oil imports. This paper investigates the determinants of China's energy import demand by using cointegraiton and VECM techniques. The findings suggest that, in the long run, growth of industrial production and expansion of transport sectors affect China's oil imports, while domestic energy output has a substitution effect. Thus, as the Chinese economy industrializes and the automotive sector expands, China's oil imports are likely to increase. Though China's domestic oil production has a substitution effect on imports, its growth is limited due to scarce domestic reserve and high exploration costs. It is anticipated that China will be more dependent on overseas oil supply regardless of the world oil price.     

Quantifying the causes of the global food commodity price crisis

The food commodity price inflation beginning in 2001 and culminating in the food crisis of 2007/08, and which returned in 2010, reflects a combination of several factors including economic growth, biofuel expansion, exchange rate fluctuations, and energy price inflation. To quantify these influence we developed an empirical model that also included crop inventory adjustments, a factor that is underemphasized in the literature. The study shows that, if inventory effects are not taken into account, the impacts of the various factors on food commodity price inflation would be overestimated. Although our model explains most of the price fluctuation observed in 2001–2011, it is not able to explain all of it. Other factors, such as speculation, trade policy and weather shocks, which are not included in the analysis, might be responsible for the remaining contribution to the food commodity price increase.     

Chinese nuclear energy politics: Viewpoint on energy

Since nuclear power is able to produce significant amounts of energy for a small amount of fuel, this method has recently attracted attention of most countries. In the present study, we seek to investigate the problems associated with nuclear energy in China. China is ranked 11th in terms of nuclear power generation, and it is currently producing 8587 MW of nuclear power with its 11 nuclear reactors. However, China supplies only 1.9% of its electricity from nuclear energy and it is much lower than the global average of 16%, because less than 1% of world’s uranium reserve exists in China. Currently, China is heavily dependent on imports from countries such as Russia and Australia to achieve primary fuels.     

电力与燃气在使用中的合理比价分析

电力与燃气是现代化大都市的主要能源消费品种,电力和燃气的比价具有导向作用,直接影响能源消费结构和能源使用的合理性。本文对工业发达国家和上海市的电力与燃气的比价进行了详细的分析和比较,并提出从合理使用能源,提高一次能源利用率的观点出发,电力与燃气按当量值的比价应为：居民生活使用要大于１．７：１,商业使用要大于１．２：１,并小于３．６：１。     

The relationship between the price and demand for natural gas: A partially controlled study

Since the onset of the energy crisis, indicated by the start of the Arab oil embargo, the price of natural gas increased for most residential consumers. the relationship between price and monthly demand over five years is examined for a sample of almost identical owner-occupied town houses in a planned community in central New Jersey, USA. It is shown that, since the onset of the energy crisis, the average price, in current dollars, of gas has increased in the USA, and the average demand has decreased, leading to a significant negative estimate of elasticity. However, this disappears if the effects of overall inflation on demand are removed. Closer examination reveals that the relationship between current price and demand is not linear, since the major decrease in demand occurred during the winter immediately following the embargo, but the major increases in current price occurred during subsequent winters. Whether the large reduction in demand is due to price increases, overall inflation, or is a response to conservation appeals by US public officials is an open question. No short-term effects of price on demand are found.     

燃气能源销售中“照付不议”合同若干问题研究

“照付不议”合同在法律上有着自身丰富的法律内涵,作为国际能源销售的通行惯例,如何平衡双方的合同权利义务至关重要。随着实践的发展,“照付不议”合同呈现出灵活性、短期性的特点,强调对市场变化的回应。“照付不议”在实践中存在着双方权利、义务失衡、气价定价模糊、计量标准难以确定等诸多难题,如何对上述问题进行制度完善值得深入研究。     

Inflation target and (a)symmetries in the oil price pass-through to inflation

In this paper we employ state-space models to estimate the pass-through of oil price changes to consumer prices for a large sample of countries from 1970 to 2017. By controlling for self-selection bias and endogeneity and allowing for different responses to positive and negative price changes, we asses the differences between explicit inflation targeting (IT) countries and a control group. Surprisingly perhaps, our results suggest that the pass-through is higher for IT countries. Our main contribution is to show that these is mainly due to IT countries having a significant higher pass-through than non-IT countries when the oil price decreases: a 10% drop in oil price leads about a 0.11% drop in inflation in ITers (of which 4pp are explained by the monetary regime). Importantly, we show that adopting IT reduces the asymmetry of the pass-through. We run several robustness checks and conclude that falling oil prices are more welcomed by the central banks with an IT framework, in particular during deflationary episodes or when inflation is above the target.     

中东战争低价石油及其中国的对策

无论美国伊拉克能否开战,中东的紧张局势都会令石油市场引发新的动荡,加上非欧佩克国家石油生产能力迅猛增长,全球环境因素和市场供求关系等因素的共同作用,将使国际石油市场很可能出现低于＄20的价格。由于我国的石油天然气的生产和发现成本远远高于国际平均水平,多年来国际市场高昂的石油价格撑托着我国石油产业生存空间。低价石油时代的来临会对我国能源产业生存造成威胁。中国能源产业需要改变生存方式,降低成本,而现存能源管理机制不能适应全球化市场竞争和应对低价石油冲击的能力,目前,需寻找新的思路,选择新的策略,能源产业才能走出两难处境,才能确保国家的能源安全。这有待我们用全新的战略和对策做出回答。     

中国能源市场形势分析及预测

2004年能源生产快速增长,需求十分旺盛,主要能源产品进口大幅增加,出口明显减少,能源价格大幅攀升。2005年能源需求增速将有所回落,能源供求形势将比2004年有较大缓减。预计全年发电量同比增长12％左右,煤炭产量同比增长8.5％左右,成品油表观消费量同比增长10％左右。煤炭和电力价格仍呈上升趋势,国际油价波动幅度将有所放缓。建议推进能源价格形成机制改革,建立和逐步完善能源产品储备制度,重视高耗能产品的国际贸易。     

Energy development in the Caribbean — options and necessities

The energy importing countries of the Caribbean have experienced substantial increases in the costs of the crude oil imports on which they largley depend. Their weak posiitons is mainly the result of a merge resource base But, argue Trevor Byer, Joerg-Uwe Richter and Joseph Vardi, Caribbean energy problems have been aggravted by inapproriate policies and institutional constraints. The most immediate way of improving the position is to concentrate on conservation and the substitution of indigenous fuels for imported energy, as far as is economically feasible. Approriate pricing policies and rational planning are essential if any lasting improvement is to be made. External assistance is also needed to develop the energy resource base, including hydrocarbons, and is available from bilateral and multilateral institutions.     

Importance of biomass energy sources for Turkey

Various agricultural residues such as grain dust, crop residues and fruit tree residues are available in Turkey as the sources of biomass energy. Among the biomass energy sources, fuelwood seems to be one of the most interesting because its share of the total energy production of Turkey is high at 21% and the techniques for converting it to useful energy are not necessarily sophisticated. Selection of a particular biomass for energy requirements is influenced by its availability, source and transportation cost, competing uses and prevalent fossil fuel prices. Utilization of biomass is a very attractive energy resource, particularly for developing countries since biomass uses local feedstocks and labor. Like many developing countries, Turkey relies on biomass to provide much of its energy requirement. More efficient use of biomass in producing energy, both electrical and thermal, may allow Turkey to reduce petroleum imports, thus affecting its balance of payments dramatically. Turkey has always been one of the major agricultural countries in the world. The importance of agriculture is increasing due to biomass energy being one of the major resources in Turkey. Biomass waste materials can be used in Turkey to provide centralized, medium- and large-scale production of process heat for electricity production. Turkey's first biomass power project is under development in Adana province, at an installed capacity of 45 MW. Two others, at a total capacity of 30 MW, are at the feasibility study stage in Mersin and Tarsus provinces. Electricity production from biomass has been found to be a promising method in the nearest future in Turkey.