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Annual Review of Resource Economics - Volume 5, 2013
Volume 5, 2013
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The Economics of Solar Electricity
Vol. 5 (2013), pp. 387–426More LessThe benefits and costs of increasing solar electricity generation depend on the scale of the increase and on the time frame over which it occurs. Short-run analyses focus on the cost-effectiveness of incremental increases in solar capacity, holding the rest of the power system fixed. Solar’s variability adds value if its power occurs at high-demand times and displaces relatively carbon-intensive generation. Medium-run analyses consider the implications of nonincremental changes in solar capacity. The cost of each installation may fall through experience effects, but the cost of grid integration increases when solar requires ancillary services and fails to displace investment in other types of generation. Long-run analyses consider the role of solar in reaching twenty-first-century carbon targets. Solar’s contribution depends on the representation of grid integration costs, on the availability of other low-carbon technologies, and on the potential for technological advances. By surveying analyses for different time horizons, this article begins to connect and integrate a fairly disjointed literature on the economics of solar energy.
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OPEC: What Difference Has It Made?
Vol. 5 (2013), pp. 427–443More LessThe main purpose of this paper is to review the evolution of OPEC models and to link this evolution to some key events in the oil market. Our main conclusion is that OPEC’s pricing power varies over time. In many instances, OPEC can lose power to limit oil price movements in either direction. Such changes in pricing power are induced by market conditions and can occur in both weak and tight market conditions. Because of OPEC’s varying conduct, there is not a single model that fits OPEC behavior. Hence analysts have been forced to choose from a wide range of models to explain certain episodes. The empirical literature has not been successful in distinguishing between the various competing models, as these models offer very similar predictions.
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National Oil Companies and the Future of the Oil Industry
Vol. 5 (2013), pp. 445–462More LessEver since the 1970s, a small number of national oil companies (NOCs) have dominated the world supply of oil and other hydrocarbons. Despite the huge influence that NOCs have on political economy, systematic scholarship remains surprisingly thin. I examine the factors that explain the wide variation in the strategy and performance of NOCs and survey the literature that has suggested the many ways in which NOCs play pivotal political and economic roles in resource-rich countries. As we look to the future, the fate of NOCs hinges on the price of oil, which may be eroded as new supplies (largely outside the control of most NOCs), such as deep water and shale oil, affect global markets.
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The Perverse Effects of Biofuel Public-Sector Policies
Vol. 5 (2013), pp. 463–483More LessBiofuel policies are a subset of policies designed to achieve energy security, an improved environment, enhanced agricultural incomes, technological change, and overall economic benefits, with increased domestic energy production creating green jobs and foreign exchange savings. In assessing this broad spectrum of proclaimed policy goals with the outcome of biofuel mandates, subsidies, import barriers, binary sustainability standards, and indirect land use measures, we identify many perverse and contradictory effects. Most importantly, we show how biofuel policies established the crop-energy price link and hence the food-fuel trade-off, the contradictory effects of combining mandates with different subsidies, the various surprising welfare economic effects, and the various inconsistencies associated with binary sustainability standards and carbon leakages. We conclude with examples of how biofuel policies have generated paradoxical effects in many other different dimensions.
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