Mitigation from a cross-sectoral perspective

Energy efficiency and consumption — the rebound effect — a survey

This paper explores similarities and differences between the run-up of oil prices in 2007–08 and earlier oil price shocks, looking at what caused these price increases and what effects they had on the economy. Whereas previous oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007–08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been similar to those observed in earlier episodes, with significant effects on consumption spending and purchases of domestic automobiles in particular. Absent those declines, it is unlikely that the period 2007Q4–2008Q3 would have been characterized as one of recession for the United States. This episode should thus be added to the list of U.S. recessions to which oil prices appear to have made a material contribution.

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Causes and Consequences of the Oil Shock of 2007–08

https://cup.edu.cn/peakoil/docs/20140408160524637170.pdf

Depletion of fossil fuels and anthropogenic climate change—A review

This paper examines the factors responsible for changes in crude oil prices. The paper reviews the statistical behavior of oil prices, relates this to the predictions of theory, and looks in detail at key features of petroleum demand and supply. Topics discussed include the role of commodity speculation, OPEC, and resource depletion. The paper concludes that although scarcity rent made a negligible contribution to the price of oil in 1997, it could now begin to play a role.

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Understanding Crude Oil Prices

The speed of vehicle ownership expansion in emerging market and developing countries has important implications for transport and environmental policies, as well as the global oil market. The literature remains divided on the issue of whether the vehicle ownership rates will ever catch up to the levels common in the advanced economies. This paper contributes to the debate by building a model that explicitly models the vehicle saturation level as a function of observable country characteristics: urbanization and population density. Our model is estimated on the basis of pooled time-series (1960-2002) and cross-section data for 45 countries that include 75 percent of the worldOs population. We project that the total vehicle stock will increase from about 800 million in 2002 to more than two billion units in 2030. By this time, 56% of the worldOs vehicles will be owned by non-OECD countries, compared with 24% in 2002. In particular, ChinaOs vehicle stock will increase nearly twenty-fold, to 390 million in 2030. This fast speed of vehicle ownership expansion implies rapid growth in oil demand.

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Vehicle Ownership and Income Growth, Worldwide: 1960-2030

This paper makes projections of the growth in the car and total vehicle stock to the year 2015, for OECD countries and a number of developing economies, including China, India, and Pakistan. The projections are based on an econometrically estimated model that explains the growth of the car/population ratio (`car ownership') as a function of per-capita income; a similar model is used for vehicle ownership. The model estimations are based on annual data for 26 countries over the period 1960–1992; it is the first study to include countries covering the full range of income levels, from lowest to highest. The models are dynamically specified, so that short- and long-run income elasticities of car and vehicle ownership are estimated. These income elasticities depend upon per-capita income, ranging from about 2.0, for low- and middle-income levels (that is, ownership grows twice as fast as income), down to zero, as ownership saturation is approached for the highest income levels. The similarities and differences among countries are embodied within the model specification, and the implications for the projections are analyzed. ©

Income's effect on car and vehicle ownership, worldwide, 1960-2015

This paper estimates the effects on energy and oil demand of changes in income and oil prices, for 96 of the world’s largest countries, in per-capita terms. We examine three important issues: the asymmetric effects on demand of increases and decreases in oil prices; the asymmetric effects on demand of increases and decreases in income; and the different speeds of demand adjustment to changes in price and in income. Its main conclusions are the following: (1) OECD demand responds much more to increases in oil prices than to decreases; ignoring this asymmetric price response will bias downward the estimated response to income changes; (2) demand’s response to income decreases in many Non-OECD countries is not necessarily symmetric to its response to income increases; ignoring this asymmetric income response will bias the estimated response to income changes; (3) the speed of demand adjustment is faster to changes in income than to changes in price; ignoring this difference will bias upward the estimated response to income changes. Using correctly specified equations for energy and oil demand, the long-run response in demand for income growth is about 1.0 for Non-OECD Oil Exporters, Income Growers and perhaps all Non-OECD countries, and about 0.55 for OECD countries. These estimates for developing countries are significantly higher than current estimates used by the US Department of Energy. Our estimates for the OECD countries are also higher than those estimated recently by Schmalensee-Stoker-Judson (1998) and Holtz-Eakin and Selden (1995), who ignore the (asymmetric) effects of prices on demand. Higher responses to income changes, of course, will increase projections of energy and oil demand, and of carbon dioxide emissions.

/pdf/the-asymmetric-effects-of-changes-in-price-and-income-on-2eb9b6c9we.pdf

The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand

THE DISTRIBUTION OF THE GAINS from cooperation between two or more economic agents is a problem that appears in several contexts in economics: bilateral monopoly, oligopoly theory, and the theory of regional cooperation.2 This paper concerns regional cooperation in planning investment in electric power, with reference to the four states of the Southern Electricity Region of India (Andhra Pradesh, Kerala, Mysore, and Tamil Nadu). The problem is to achieve a mutually acceptable basis for agreement, such that it's in each state's own interest to cooperate. At present, although regional planning has been accepted in principle by the Central Government of India and in greater or lesser degree by the various states, each State Electricity Board is planning on the assumption of self-sufficiency and there is little cooperation between the various Boards. Continuation of these policies will result in sub-optimal development of the electric power resources in the region: a relative neglect of the excellent hydro resources in Mysore and Kerala, in favor of less economic nonhydro power resources in Andhra Pradesh and Tamil Nadu.

/pdf/sharing-the-gains-from-regional-cooperation-a-game-theoretic-4g8hta4dcu.pdf

Sharing the Gains from Regional Cooperation: A Game Theoretic Application to Planning Investment in Electric Power

This paper describes a framework for analyzing the imperfect pricereversibility ("hysteresis") of oil demand. The oil demand reductions following the oil price increases of the 1970s will not be completely reversed by the price cuts of the 1980s, nor is it necessarily true that these partial demand reversals themselves will be reversed exactly by future price increases. We decompose price into three monotonic series: price increases to maximum historic levels, price cuts, and price recoveries (increases below historic highs). We would expect that the response to price cuts would be no greater than to price recoveries, which in turn would be no greater than for increases in maximum historic price. For evidence of imperfect price-reversibility, we test econometrically the following U.S. data: vehicle miles per driver, the fuel efficiency of the automobile fleet, and gasoline demand per driver. In each case, our econometric results allow us to reject the hypothesis of perfect price-reversibility. The data show smaller response to price cuts than to price increases. This has dramatic implications for projections of gasoline and oil demand, especially under low-price assumptions.

Dermot Gately

Papers

Vehicle Ownership and Income Growth, Worldwide: 1960-2030

Income's effect on car and vehicle ownership, worldwide, 1960-2015

The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand

Sharing the Gains from Regional Cooperation: A Game Theoretic Application to Planning Investment in Electric Power

Imperfect Price-Reversibility of U.S. Gasoline Demand: Asymmetric Responses to Price Increases and Declines