Energy prices, production

This paper investigates economic incentives influencing the adoption of energy saving technology by industry, namely, CHP in UK and Dutch manufacturing sectors. The empirical analysis is based on a cross sectional time series econometric model, and examines how industrial output and historical increases in the price of electricity relative to gas prices, spark the diffusion of CHP. Production and price elasticities are estimated across heterogeneous industrial groups. Using data for 13 manufacturing sectors the model shows that fuel cost savings and industry output impact significantly on CHP uptake. Model outcomes are found to differ depending on the period of estimation and the estimation period is key in determining the impact of gas price and purchased power prices on adoption of CHP

Asymmetric adaptations to energy price changes

The effectiveness of policies to reduce the use of energy depend on the elasticity of substitution between the various inputs and on the rate of technological progress. This paper presents a theoretical model emphasising energy investments’ characteristics of uncertainty and irreversibility that result in testable hypotheses concerning the relative values of substitution parameters and rates of technological change in periods of high and increasing energy prices and in periods of low prices. Estimation results for a panel of sectors of the Dutch economy show that the elasticity of substitution between energy and other inputs is low in periods of low energy prices, whereas it is significantly higher in the preceding period of high and increasing energy prices. Furthermore, energy-saving technological progress in periods of high and increasing energy prices is also significantly higher than if energy prices are low and falling. The regression results suggest that, due this asymmetric response of firms to changes in energy prices, taxing energy in the current period of low energy prices will not yield substantial reductions in energy use of Dutch industry.

Energy Prices Jump While Food Prices Show Modest Increases

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Produced monthly by the Bureau of Labor Statistics (BLS), the CPI uses a “market basket,” or a sample of goods and services that consumers purchase for day-to-day living, and weighs each item on the basis of the amount of spending reported by a sample of families and individuals. Widely used as a measure of inflation, the CPI provides information about price changes in the nation’s economy and can be used by government, business, labor, and private individuals as a guide to making economic decisions. Over the last 12 months, the index for all items less food and energy has slowly accelerated. In contrast, the all-items index has decelerated since a 12-month increase of 3.9 percent in September 2011. The September 2011 increase capped a run of steady acceleration in the all-items index that began in December 2010. Despite the contrast, the all-items index increased at a higher rate than the index for all items less food and energy in the first quarter of 2012. This summary compares price changes in the CPI for detailed categories of goods and services over the first quarter of 2012 with those in 2011

COMMODITY PRICES AND RESOURCE USE UNDER VARIOUS ENERGY ALTERNATIVES IN AGRICULTURE

An interregional, large-scale linear programming model is used to evaluate the economic impact of the energy crisis on U.S. agricultural production. The study examines the changes in crop production under energy minimization, an energy shortage, high energy prices, and high agricultural exports accompanied by high energy prices. Results indicate that reduced supplies or higher prices for energy will have important impacts on commodity prices, irrigated agriculture, and on rural communities.Resource /Energy Economics and Policy,

Asymmetric adaptations to energy price changes

The effectiveness of policies to reduce the use of energy depend on the elasticity of substitution between the various inputs and on the rate of technological progress. This paper presents a theoretical model emphasising energy investments\' characteristics of uncertainty and irreversibility that result in testable hypotheses concerning the relative values of substitution parameters and rates of technological change in periods of high and increasing energy prices and in periods of low prices. Estimation results for a panel of sectors of the Dutch economy show that the elasticity of substitution between energy and other inputs is low in periods of low energy prices, whereas it is significantly higher in the preceding period of high and increasing energy prices. Furthermore, energy-saving technological progress in periods of high and increasing energy prices is also significantly higher than if energy prices are low and falling. The regression results suggest that, due this asymmetric response of firms to changes in energy prices, taxing energy in the current period of low energy prices will not yield substantial reductions in energy use of Dutch industry.

Threshold Effects of Energy Price Changes

The effectiveness of policies to reduce the use of energy depend on the elasticity of substitution between the various inputs and on the rate of technological progress. This paper presents a theoretical model emphasising energy investments’ characteristics of uncertainty and irreversibility that result in hypotheses concerning the relative values of substitution parameters and rates of technological change in periods of high and increasing energy prices and in periods of low prices. The theoretical model suggests that threshold level effects exist. Firms are induced to substitute away from energy only if prices of energy exceed a certain threshold level and they reverse the technology only if prices are low enough. Using panel data for the Dutch economy we do not find threshold effects in the level of energy prices.

Relationship between Crude Oil Prices and Stock Prices of Alternative Energy Companies with Recent Evidence

This paper examines the recent interactive relationships between crude oil prices and stock performances of alternative energy companies. Oil prices and stock index of alternative energy sector are found independent from each other before late 2006. Contrary to existing studies, however, we find significant interdependence between oil prices and stock index of alternative energy industry in the recent years. Since late 2006, oil prices become significantly responsible for the stock performances of alternative energy companies. This finding suggests that the stock market investors of alternative energy sector incorporate oil price shocks into their trading decisions only recently.Crude oil price; Alternative energy; Oil stock index

The impact of low carbon generation on the future price of electricity

There are relatively few who would argue that tackling climate change, and therefore reducing carbon emissions, should not be a priority for society and the energy sector. But significant increases in energy prices are a necessary consequence of that policy. Using published sources this paper estimates that by 2020 UK and EU regulatory mechanisms designed to promote lower carbon energy will increase average household electricity prices by between 23% and 42%, and median industrial electricity prices by between 30% and 60%

Energy Prices, Growth,and the Channels in Between: Theory and Evidence

The paper first develops a theoretical model with different sectors, each providing a channel for an impact of energy prices on growth. In the short run, growth is hampered by increasing energy prices. In the long run, however, capital accumulation may be crowded out by energy use. This happens in the sectors with poor substitution possibilities between primary inputs where growth increases with rising energy prices. In the empirical part, estimations using di¤erent channels and energy sources with five-year average panel data for a sample of 44 developed countries in the period 1975-1999 are presented. It is shown that, for a large variety of constellations, rising energy prices are not a threat to economic development, they can even be positive for growth.Energy Prices and Growth, Endogenous Capital Accumulation, Structural Change, Panel Data

Producer Inflation in 2014: Energy Prices Drop but Prices for Services Advance

The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. The PPI provides measures of final demand (price changes for goods, services, and construction sold to consumers, capital investment buyers, government, and export) and intermediate demand (price changes for goods, services, and construction sold to businesses, excluding capital investment goods, as inputs to production). This issue of Beyond the Numbers describes price changes in PPIs throughout 2014. Falling energy prices and rising services prices were some of the top movers in 2014