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Self-sufficiency in one country
Bookwatch
introducing topics of exploration, geology, production, jurisdiction and the different oil needs of Australia, Brunei, Burma, China, Indonesia, Malaysia, the Philippines, Taiwan, Thailand and Vietnam. Then - for the meat in his sandwich - he takes nine actual or potential jurisdictional disputes. Systematically, he presents geographical, geological, explorational and lease history details, assesses status, indicates possible boundaries and places each dispute in its national and international setting, Finally, in the third section of his book, the author discusses how the disputants have behaved, eg taking over areas by force, unilaterallylicensing exploration and exploitation, making diplomatic gestures, refusingnegotiation, doing nothing, negotiating directly or indirectly, and collaborating regardless of the dispute, A surprising quantity of germane fact is packed into what, for so large a
Self-sufficiency
in
Fear of nuclear power and of petroleum dependency are helping the cause of coal for large-scale electricity generation, In the UK, with her more enduring riches of coal than of fluid hydrocarboas, coal lures many as a means to energy self-sufficiency. 'After all', as Louis Turner wrote only a few years ago, 'the United Kingdom has proven coal reserves of some 45 billion tonnes which are enough to satisfy some 300 years of current consumption'. But Turner's argument was not so much for leaning on the UK's 'safe" domestic reserves as for keeping import options open, to gain security and to counter monopoly, The monograph in which Turner advised freeing the CEGB to buy foreign coal was one of five such papers on aspects of UK energy selfsufficiency.6 The quintet was published under the British Institutes' Joint Energy Policy Programme 7 and was soon capped by the record of a conference of the institutes. ~ The conference had been convened to discuss not only the claims of coal, electricity, gas, oil and conservation but also to mull over questions of domestic versus foreign supplies, environmental pro-
ENERGY POLICY August 1987
subject, is a slender little book. The author has succeeded in providing, without frills or furbelows, as he set out to, ' a complete description and analysis of the hydrocarbon factor in jurisdictional disputes and its place in the larger fabric of international relations in the region', There may be a moral somewhere in Valencia's report of the Arafura Sea dispute. The antagonists there are Australia and Indonesia. One of their options is to share any future discovcry in a 12 000 square nautical mile area that includes most of the Timor Basin. 'It is believed', writes Valencia, 'that Australia may offer Indonesia the fishing rights in the area while attempting to retain the mineral rights'. Could the Australians possibly be arguing that subsea hydrocarbon resources will be commensurable with what is (we have agreed) the primary f u e l - food?
one
country
tection and new technology, The record's editors, Michael Belgrave and Margaret Cornell (respectively the Joint Energy Policy Programme's head and editor), reflect in the last pages that a general statement of the conferers' conclusions was not attempted and could not have been agreed anyway - individual dissents would have had to be noted. Nevertheless, according to the record's cover blurb (presumably authorized by the editors): the contributors concur that: - 100% self-sufficiency, to the extent that it existsin each fuel, is fortunate but there is no justification, on grounds of security, balance of payments or economics, to incur additional costs in order to maintain it at that level. - Energy developments that do irretrievable damage to important parts of the environment or national heritage are no longer acceptable. - Technological developments, particularly at the consumer end of the energy chain, can be expected to combine with consumer response to price to keep supply and demand for energy largely in balance in the coming decades. Those superficially clear-cut 'conclusions' do less than justice to the quality of discussion and the shading of opinion revealed inside the book.
To an impatient browser the blurb might even suggest that U K energy policy exists and suffices. Within the covers, though, the conference chairman - redoubtable Michael Posner sums up the proceedings to different effect. Finally, he even admits that he hankers a bit after an energy policy White Paper. 'But', he says realistically, 'perhaps instead of that, the report from this conference might play a very important part, providing a framework for a timely discussion of energy issues'. That it should indeed have done. Our Martian visitor might again be struck by the contrast between the thoughts of learned energists in one small, energy-rich country and those of some of their counterparts in a large, energy-rich country only a few thousand miles away. In the small country a principal debating point is whether policy should lead in twenty years' time to one or another level of self-sufficiency between 20% and 80
o, 90%, while in the large country
(upon some of whose surpluses the
small one might have to call) there is a school warning of major energy and food shortages, within a few decades, the whole world over. Admittedly, and a degree reassuringly, there are other schools in the large country that repudiate such fears, but what if the finite-resource people are right? For how long can how many countries shed percentages of self-sufficiency and buy more advantageously abroad? Posner said, deliciously, that he could not worry about 'the availability of particular physical things in the ground' for his great-great-grandchildren. But what if his children are to be the progeny deprived? For his, their and all our sakes we must hope that Gever et al have got their modelling very wrong indeed. Arthur C o n w a y Kenton, Harrow Middlesex, UK
~John Gever, Robert Kaufmann, David Skole and Charles VGrGsmarty,Beyond Oil - The Threat to Food and Fuel in the Coming Decades, Ballinger, Cambridge, MA 02138, USA, 1986. 2G. Schepens, D. Mahy, H. Buis and W. Palz, eds, Solar Energy in Agriculture and
389
Bookwatch/Book reviews Industry: Potential of Solar Heat in European Agriculture, an Assessment, Vol 1, for the CEC, D. Reidel, Dordrecht, Netherlands, 1986. 3Frank J. Calzonetti and Barry D. Solomen, eds, Geographical Dimensions of Energy, D. Reidel, Dordrecht, Netherlands, 1985. 4Ronald C. Keith, ed, Energy, Security and Economic Development in East Asia, Croom Helm, Beckenham, Kent, UK, 1986.
Book
5Mark J. Valencia, South-East Asian Seas: Oil Under Troubled Waters - Hydrocarbon Potential, Jurisdictional Issues and International Relations, Oxford University Press, Singapore, Malaysia, 1985. 6Louis Turner, Coal's Contribution to UK Self-sufficiency, JEP Paper 9, Heinemann Educational, London, 1984. The other four papers in the series are: Jonathan P. Stern, Gas's Contribution to UK Selfsufficiency, JEP 10; Richard Eden and Nigel Evans, Electricity's Contribution to
reviews
o.v,o.,
by Corazon Morales Siddayao
Westview Press, Boulder, CO, USA, 1986, 142 pp, £18 At the time of writing this book, the author was Research Coordinator and Leader of the Energy and Industrialisation project at the East-West Center in Hawaii. She is now with the World Bank. The opening flyleaf to the book claims that the author has set out to examine measurement and conceptual issues, focusing on the more basic economic and energy concepts and methods in demand analysis and - in keeping with these c l a i m s - the opening chapter is offered as a primer on the engineering aspects of energy, with attempts to explain the concepts of entropy and enthalpy. It concludes with the words ' A n energy or entropy theory of value alone cannot handle questions related to choice, subjective utility, or contradictory constraints on economic choice. Neither can economics alone provide the answer'. This is immediately followed by a parallel chapter offering explanations of the basic economic concepts, and another general chapter on energy output ratios and coefficients. This is all in keeping with the authors' stated view of her readership as multidisciplinary, policy-oriented scholars rather than specialists,
390
t..,
,o. ,a,.,y capita] will tend to substitute for energy in the long run, but this, like some
Energy elasticities ENERGY DEMAND AND ECONOMIC GROWTH: MEASUREMENT AND CONCEPTUAL ISSUES IN POLICY ANALYSIS
UK Self-sufficiency, JEP 11 ; Eileen Marshall and Colin Robinson, Oil's Contribution to UK Self-sufficiency, JEP 12, and Mayer Hillman, Conservation's Contribution to UK Self-sufficiency, JEP 13. ~The Policy Studies Institute and the Royal Institute of International Affairs run the joint programme in association with the British Institute of Energy Economics. 8Robert Belgrave and Margaret Cornell, Energy Self-sufficiency for the UK?, Gower, Aldershot, UK, 1985.
After this introduction I experienced a sense of disappointment when I came to read the book. This does not mean that it is a bad book. It means rather that it is not the book it claims to be. It is in fact first and foremost a review of work done by a number of workers, including the author herself, to identify income, price and substitution elasticities of energy demand in a number of developing countries. It is heavily weighted towards reporting the results of these studies with very little about the hypotheses behind them or the problems and concepts involved. The methods adopted for estimating the elasticities (eg loglinear or translog function) are stated without much attempt to say why one method was chosen rather than the other and little explanation of the relative merits of the methods or their special applicability to particular studies. In other words, despite the author's protestations, this is a book for specialists, namely people specializing in estimating income, price and substitutions elasticities for energy at both macroeconomic and disaggregated levels. In this role it is an interesting and useful piece of work but it would have profited from a more structured and fuller discussion of the findings, Why, for example, are energy and capital substitutes in some industries and complements in others; and even complements in a given industry in one country but substitutes in the same industry in another country? It is suggested that capital and energy are usually complements in the short run
of the other tentative explanations for phenomena in the book seems too simple and the arguments are not developed. It might have been illuminating if the findings could have been grouped and examined collectively in the way that Jorgenson summarized the findings of his disaggregated study of the effect of energy price rise on the American economy, but, in fairness to Dr Siddayao, it must be said that she was up against problems of comparability between countries and differences in methodology adopted by different workers. Since the author does not return to the themes of the opening chapters we must ask whether they can stand alone. The first chapter on energy concepts cannot. Anyone without a good working knowledge of the concepts of enthalpy and entropy would be very little wiser about them after reading this chapter. The other two chapters, on economic concepts, go much further to do what they claim to do but are open to anecdotal objections. The discussion is almost entirely as if it is the energy-output ratio that is under examination while in fact the remainder of the book is about studies of what the author calls the 'elasticity coefficient', a dimensionless ratio between growth rates. In her discussion the author is guilty of some misquotations. It is nice to find one's own work quoted but less so to have it misquoted. I did not say that 'even if the energy-output ratio were to be constant the elasticity coefficient would vary over time with the changes in the economic growth rate', for obviously if the energy-output ratio is unchanging the elasticity must be unity. I said
ENERGY POLICY August 1987
introducing topics of exploration, geology, production, jurisdiction and the different oil needs of Australia, Brunei, Burma, China, Indonesia, Malaysia, the Philippines, Taiwan, Thailand and Vietnam. Then - for the meat in his sandwich - he takes nine actual or potential jurisdictional disputes. Systematically, he presents geographical, geological, explorational and lease history details, assesses status, indicates possible boundaries and places each dispute in its national and international setting, Finally, in the third section of his book, the author discusses how the disputants have behaved, eg taking over areas by force, unilaterallylicensing exploration and exploitation, making diplomatic gestures, refusingnegotiation, doing nothing, negotiating directly or indirectly, and collaborating regardless of the dispute, A surprising quantity of germane fact is packed into what, for so large a
Self-sufficiency
in
Fear of nuclear power and of petroleum dependency are helping the cause of coal for large-scale electricity generation, In the UK, with her more enduring riches of coal than of fluid hydrocarboas, coal lures many as a means to energy self-sufficiency. 'After all', as Louis Turner wrote only a few years ago, 'the United Kingdom has proven coal reserves of some 45 billion tonnes which are enough to satisfy some 300 years of current consumption'. But Turner's argument was not so much for leaning on the UK's 'safe" domestic reserves as for keeping import options open, to gain security and to counter monopoly, The monograph in which Turner advised freeing the CEGB to buy foreign coal was one of five such papers on aspects of UK energy selfsufficiency.6 The quintet was published under the British Institutes' Joint Energy Policy Programme 7 and was soon capped by the record of a conference of the institutes. ~ The conference had been convened to discuss not only the claims of coal, electricity, gas, oil and conservation but also to mull over questions of domestic versus foreign supplies, environmental pro-
ENERGY POLICY August 1987
subject, is a slender little book. The author has succeeded in providing, without frills or furbelows, as he set out to, ' a complete description and analysis of the hydrocarbon factor in jurisdictional disputes and its place in the larger fabric of international relations in the region', There may be a moral somewhere in Valencia's report of the Arafura Sea dispute. The antagonists there are Australia and Indonesia. One of their options is to share any future discovcry in a 12 000 square nautical mile area that includes most of the Timor Basin. 'It is believed', writes Valencia, 'that Australia may offer Indonesia the fishing rights in the area while attempting to retain the mineral rights'. Could the Australians possibly be arguing that subsea hydrocarbon resources will be commensurable with what is (we have agreed) the primary f u e l - food?
one
country
tection and new technology, The record's editors, Michael Belgrave and Margaret Cornell (respectively the Joint Energy Policy Programme's head and editor), reflect in the last pages that a general statement of the conferers' conclusions was not attempted and could not have been agreed anyway - individual dissents would have had to be noted. Nevertheless, according to the record's cover blurb (presumably authorized by the editors): the contributors concur that: - 100% self-sufficiency, to the extent that it existsin each fuel, is fortunate but there is no justification, on grounds of security, balance of payments or economics, to incur additional costs in order to maintain it at that level. - Energy developments that do irretrievable damage to important parts of the environment or national heritage are no longer acceptable. - Technological developments, particularly at the consumer end of the energy chain, can be expected to combine with consumer response to price to keep supply and demand for energy largely in balance in the coming decades. Those superficially clear-cut 'conclusions' do less than justice to the quality of discussion and the shading of opinion revealed inside the book.
To an impatient browser the blurb might even suggest that U K energy policy exists and suffices. Within the covers, though, the conference chairman - redoubtable Michael Posner sums up the proceedings to different effect. Finally, he even admits that he hankers a bit after an energy policy White Paper. 'But', he says realistically, 'perhaps instead of that, the report from this conference might play a very important part, providing a framework for a timely discussion of energy issues'. That it should indeed have done. Our Martian visitor might again be struck by the contrast between the thoughts of learned energists in one small, energy-rich country and those of some of their counterparts in a large, energy-rich country only a few thousand miles away. In the small country a principal debating point is whether policy should lead in twenty years' time to one or another level of self-sufficiency between 20% and 80
o, 90%, while in the large country
(upon some of whose surpluses the
small one might have to call) there is a school warning of major energy and food shortages, within a few decades, the whole world over. Admittedly, and a degree reassuringly, there are other schools in the large country that repudiate such fears, but what if the finite-resource people are right? For how long can how many countries shed percentages of self-sufficiency and buy more advantageously abroad? Posner said, deliciously, that he could not worry about 'the availability of particular physical things in the ground' for his great-great-grandchildren. But what if his children are to be the progeny deprived? For his, their and all our sakes we must hope that Gever et al have got their modelling very wrong indeed. Arthur C o n w a y Kenton, Harrow Middlesex, UK
~John Gever, Robert Kaufmann, David Skole and Charles VGrGsmarty,Beyond Oil - The Threat to Food and Fuel in the Coming Decades, Ballinger, Cambridge, MA 02138, USA, 1986. 2G. Schepens, D. Mahy, H. Buis and W. Palz, eds, Solar Energy in Agriculture and
389
Bookwatch/Book reviews Industry: Potential of Solar Heat in European Agriculture, an Assessment, Vol 1, for the CEC, D. Reidel, Dordrecht, Netherlands, 1986. 3Frank J. Calzonetti and Barry D. Solomen, eds, Geographical Dimensions of Energy, D. Reidel, Dordrecht, Netherlands, 1985. 4Ronald C. Keith, ed, Energy, Security and Economic Development in East Asia, Croom Helm, Beckenham, Kent, UK, 1986.
Book
5Mark J. Valencia, South-East Asian Seas: Oil Under Troubled Waters - Hydrocarbon Potential, Jurisdictional Issues and International Relations, Oxford University Press, Singapore, Malaysia, 1985. 6Louis Turner, Coal's Contribution to UK Self-sufficiency, JEP Paper 9, Heinemann Educational, London, 1984. The other four papers in the series are: Jonathan P. Stern, Gas's Contribution to UK Selfsufficiency, JEP 10; Richard Eden and Nigel Evans, Electricity's Contribution to
reviews
o.v,o.,
by Corazon Morales Siddayao
Westview Press, Boulder, CO, USA, 1986, 142 pp, £18 At the time of writing this book, the author was Research Coordinator and Leader of the Energy and Industrialisation project at the East-West Center in Hawaii. She is now with the World Bank. The opening flyleaf to the book claims that the author has set out to examine measurement and conceptual issues, focusing on the more basic economic and energy concepts and methods in demand analysis and - in keeping with these c l a i m s - the opening chapter is offered as a primer on the engineering aspects of energy, with attempts to explain the concepts of entropy and enthalpy. It concludes with the words ' A n energy or entropy theory of value alone cannot handle questions related to choice, subjective utility, or contradictory constraints on economic choice. Neither can economics alone provide the answer'. This is immediately followed by a parallel chapter offering explanations of the basic economic concepts, and another general chapter on energy output ratios and coefficients. This is all in keeping with the authors' stated view of her readership as multidisciplinary, policy-oriented scholars rather than specialists,
390
t..,
,o. ,a,.,y capita] will tend to substitute for energy in the long run, but this, like some
Energy elasticities ENERGY DEMAND AND ECONOMIC GROWTH: MEASUREMENT AND CONCEPTUAL ISSUES IN POLICY ANALYSIS
UK Self-sufficiency, JEP 11 ; Eileen Marshall and Colin Robinson, Oil's Contribution to UK Self-sufficiency, JEP 12, and Mayer Hillman, Conservation's Contribution to UK Self-sufficiency, JEP 13. ~The Policy Studies Institute and the Royal Institute of International Affairs run the joint programme in association with the British Institute of Energy Economics. 8Robert Belgrave and Margaret Cornell, Energy Self-sufficiency for the UK?, Gower, Aldershot, UK, 1985.
After this introduction I experienced a sense of disappointment when I came to read the book. This does not mean that it is a bad book. It means rather that it is not the book it claims to be. It is in fact first and foremost a review of work done by a number of workers, including the author herself, to identify income, price and substitution elasticities of energy demand in a number of developing countries. It is heavily weighted towards reporting the results of these studies with very little about the hypotheses behind them or the problems and concepts involved. The methods adopted for estimating the elasticities (eg loglinear or translog function) are stated without much attempt to say why one method was chosen rather than the other and little explanation of the relative merits of the methods or their special applicability to particular studies. In other words, despite the author's protestations, this is a book for specialists, namely people specializing in estimating income, price and substitutions elasticities for energy at both macroeconomic and disaggregated levels. In this role it is an interesting and useful piece of work but it would have profited from a more structured and fuller discussion of the findings, Why, for example, are energy and capital substitutes in some industries and complements in others; and even complements in a given industry in one country but substitutes in the same industry in another country? It is suggested that capital and energy are usually complements in the short run
of the other tentative explanations for phenomena in the book seems too simple and the arguments are not developed. It might have been illuminating if the findings could have been grouped and examined collectively in the way that Jorgenson summarized the findings of his disaggregated study of the effect of energy price rise on the American economy, but, in fairness to Dr Siddayao, it must be said that she was up against problems of comparability between countries and differences in methodology adopted by different workers. Since the author does not return to the themes of the opening chapters we must ask whether they can stand alone. The first chapter on energy concepts cannot. Anyone without a good working knowledge of the concepts of enthalpy and entropy would be very little wiser about them after reading this chapter. The other two chapters, on economic concepts, go much further to do what they claim to do but are open to anecdotal objections. The discussion is almost entirely as if it is the energy-output ratio that is under examination while in fact the remainder of the book is about studies of what the author calls the 'elasticity coefficient', a dimensionless ratio between growth rates. In her discussion the author is guilty of some misquotations. It is nice to find one's own work quoted but less so to have it misquoted. I did not say that 'even if the energy-output ratio were to be constant the elasticity coefficient would vary over time with the changes in the economic growth rate', for obviously if the energy-output ratio is unchanging the elasticity must be unity. I said
ENERGY POLICY August 1987