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Stern D.I.,Center for Applied Macroeconomic Analysis
Ecological Economics | Year: 2010

This paper develops economic definitions of energy quality for individual fuels and energy aggregates. There are use- and exchange-value concepts, as well as marginal and total measures, of energy quality. A factor augmentation or quality coefficients approach corresponds to the use-value definition while indicators based on distance functions and relative prices are exchange-value based definitions. These indicators are identical when the elasticity of substitution between fuels is infinity but diverge or cannot be computed for other interfuel elasticities of substitution. When the elasticity of substitution is zero only the quality coefficients approach is defined. I also show that 1) the ratio of an energy volume index to aggregate joules cannot be considered a complete indicator of aggregate energy quality as it does not account for quality changes in the component fuels 2) demand curve integrals do not provide information on relative use-values or fuel qualities when the elasticity of substitution is unity or less. © 2010 Elsevier B.V. All rights reserved. Source


Sapio A.,Parthenope University of Naples | Spagnolo N.,Center for Applied Macroeconomic Analysis | Spagnolo N.,Brunel University
Energy Economics | Year: 2016

In this paper, we explore the determinants of wholesale electricity prices in an energy island such as Sicily, by estimating regime switching models with fixed and time-varying transition probabilities on daily data in the 2012-2014 period. Explanatory variables used alternatively in the price equation and in the switching equation include power demand, the supply of intermittent renewables, the residual supply index, and a congestion indicator. Four competing hypotheses on the determinants of price regimes are tested (arbitrary market power, cost profile, tacit collusion, congestion) in order to understand why, despite the general trend of declining prices induced by renewables in southern Italy, Sicilian prices stood high. The pattern of estimated coefficients is consistent with a tacit collusion story. © 2016. Source


Ratti R.A.,University of Western Sydney | Ratti R.A.,Center for Applied Macroeconomic Analysis | Vespignani J.L.,University of Tasmania | Vespignani J.L.,Center for Applied Macroeconomic Analysis
Energy Economics | Year: 2014

Hamilton identifies 1973 to 1996 as "the age of OPEC" and 1997 to the present as "a new industrial age." During 1974-1996 growth in non-OPEC oil production Granger causes growth in OPEC oil production. OPEC oil production decreases significantly with positive shocks to non-OPEC oil production in the earlier period, but does not do so in the "new industrial age". In the "new industrial age" OPEC oil production rises significantly with an increase in oil prices, unlike during "the age of OPEC" period. OPEC oil production responds significantly to positive innovations in global GDP throughout. Over 1997:Q1-2012:Q4 the negative effect on real oil price of positive shocks to non-OPEC oil production is larger in absolute value than that of positive shocks to OPEC oil production. The cumulative effects of structural shocks to non-OPEC oil production and to real oil price on OPEC oil production are large. The cumulative effects of structural shocks to OPEC production and real oil price on non-OPEC production are small. Results are robust to changes in model specification. An econometric technique to predict growth in OPEC oil production provides support for the results from the SVAR analysis. Results are consistent with important changes in the global oil market. © 2015 Elsevier B.V. Source

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