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Energy policies and programmes of IEA countries: 1977 review
Book reviews NORTH SEA OIL IN THE FUTURE by C. Robinson and 3. Morgan
216pp, £10.00, Macmillan for the Trade Policy Research Centre, London, 1978
It is difficult to avoid the conclusion that this is a disappointing book. Professor Robinson and Dr Morgan have recently finished a two year study of the economics of North Sea oil and presumably this book is intended to be the final report of that study, particularly as Dr Morgan has now moved to the British National Oil Corporation. As such, it is disappointing for two main reasons. First, it appears to have been written very quickly, with a number of inconsistencies and a strange choice of subject. For example, the government's participation policies and the role of the British National Oil Corporation - two major issues - are hardly mentioned, whereas a possible depletion policy is discussed at great length. Second, the book is little more than a compilation of earlier articles by the authors, and there is little new for anyone who has followed closely their previous work. Professor Robinson and Dr Morgan represent the right wing of British academics interested in the North Sea and to a large extent the book is a strong plea for a return to free market operations unhindered by government interference. Thus the focus is a critical assessment of government policies insofar as they affect the profitability of oil company operations, in much the same vein as Professor Robinson's earlier writings on the coal industry. One of the main conclusions is that 'the range of weapons now available to a determined Government is formidable and ministerial power is subject to minimal checks. It is not obvious that the regulatory system has arisen from public demand or from economic logic.' In part this political stance detracts from the merits of the book; in part it is an asset. An example of the former is
342
the way in which a good review of the evolution of the depletion legislation is marred by political bias; an example of the latter is the excellent discussion of licensing policy and the arbitrary decisions of the civil servants involved. The analytical core of the book is chapters III-VI which look at the main determinants of supply and profitability. The starting point is a 'surprise-free' projection which is used as a benchmark against which to test the effects of various alternative assumptions. This approach is very commendable and the various alternatives are examined with great thoroughness and clarity. The drawbacks in making generalizations are shown clearly, given the disparity in field reserves and costs. Nevertheless, useful indications are given of the price inelasticity of production, field profitability and government revenues. This section of the book is excellent and 1 would make only three small criticisms: in the chapters on taxation it is surprising that there is no reference to the extensive work of Alex Kemp; there seems little point in including the few
ENERGY POLICIES PROGRAMMES OF COUNTRIES: 1977 Review
AND lEA
International Energy Agency
333pp, $24.00, Paris, 1978
£1 I. 75,
OECD,
ANNUAL REPORT ON ENERGY RESEARCH, DEVELOPMENT AND DEMONSTRATION: Activities of the lEA 1977-78
67 pp, OECD, Paris, 1978 The International Energy Agency, grafted on to the Organisation for Economic Co-operation and Development following the momentous discussions at Detroit during the 1974 World Energy Conference, has just produced its first reports. One is the first annual report on energy R D & D . The
pages on Norway; and there is some confusion between exploration and appraisal drilling which affects later calculations. Where the book goes wrong is in the authors' belief that all they needed to do to their earlier papers was to update the figures, add a few linking sections and a concluding chapter. The coverage is therefore determined largely by the concerns of their research study, which by its nature could not be comprehensive. Some crucial issues need much more work - for example, the debate on discretionary licensing versus competitive bidding. Where the authors have done the work their policy conclusions are well argued and worth detailed consideration, but in other aspects supporting evidence is missing. The result is an unbalanced piece of work, the best parts of which show clearly that Professor Robinson and Dr Morgan could have done much better.
G~4. Mackay University of Aberdeen Aberdeen, UK
second, much larger, is a series of reviews of national energy programmes. It is hard indeed to differentiate between either their purpose or the facts reported in these two volumes. An energy researcher looking for data now has a wide choice, and were it not for the strong likelihood that each of the authorities producing international statistics copies from the other, there would be more confusion than there is. It is bad enough when one authority takes A D 2000 for its target datum and another A D 2020. confusion becomes confounded when some urban consumptions, for instance, are considered too small to consider - thus arriving at figures for combined heat and power, for example, that are meaningless when compared with established totals. The difference between inexperienced and incomplete statistical gathering is most marked when someone with even
ENERGY POLICY December 1978
216pp, £10.00, Macmillan for the Trade Policy Research Centre, London, 1978
It is difficult to avoid the conclusion that this is a disappointing book. Professor Robinson and Dr Morgan have recently finished a two year study of the economics of North Sea oil and presumably this book is intended to be the final report of that study, particularly as Dr Morgan has now moved to the British National Oil Corporation. As such, it is disappointing for two main reasons. First, it appears to have been written very quickly, with a number of inconsistencies and a strange choice of subject. For example, the government's participation policies and the role of the British National Oil Corporation - two major issues - are hardly mentioned, whereas a possible depletion policy is discussed at great length. Second, the book is little more than a compilation of earlier articles by the authors, and there is little new for anyone who has followed closely their previous work. Professor Robinson and Dr Morgan represent the right wing of British academics interested in the North Sea and to a large extent the book is a strong plea for a return to free market operations unhindered by government interference. Thus the focus is a critical assessment of government policies insofar as they affect the profitability of oil company operations, in much the same vein as Professor Robinson's earlier writings on the coal industry. One of the main conclusions is that 'the range of weapons now available to a determined Government is formidable and ministerial power is subject to minimal checks. It is not obvious that the regulatory system has arisen from public demand or from economic logic.' In part this political stance detracts from the merits of the book; in part it is an asset. An example of the former is
342
the way in which a good review of the evolution of the depletion legislation is marred by political bias; an example of the latter is the excellent discussion of licensing policy and the arbitrary decisions of the civil servants involved. The analytical core of the book is chapters III-VI which look at the main determinants of supply and profitability. The starting point is a 'surprise-free' projection which is used as a benchmark against which to test the effects of various alternative assumptions. This approach is very commendable and the various alternatives are examined with great thoroughness and clarity. The drawbacks in making generalizations are shown clearly, given the disparity in field reserves and costs. Nevertheless, useful indications are given of the price inelasticity of production, field profitability and government revenues. This section of the book is excellent and 1 would make only three small criticisms: in the chapters on taxation it is surprising that there is no reference to the extensive work of Alex Kemp; there seems little point in including the few
ENERGY POLICIES PROGRAMMES OF COUNTRIES: 1977 Review
AND lEA
International Energy Agency
333pp, $24.00, Paris, 1978
£1 I. 75,
OECD,
ANNUAL REPORT ON ENERGY RESEARCH, DEVELOPMENT AND DEMONSTRATION: Activities of the lEA 1977-78
67 pp, OECD, Paris, 1978 The International Energy Agency, grafted on to the Organisation for Economic Co-operation and Development following the momentous discussions at Detroit during the 1974 World Energy Conference, has just produced its first reports. One is the first annual report on energy R D & D . The
pages on Norway; and there is some confusion between exploration and appraisal drilling which affects later calculations. Where the book goes wrong is in the authors' belief that all they needed to do to their earlier papers was to update the figures, add a few linking sections and a concluding chapter. The coverage is therefore determined largely by the concerns of their research study, which by its nature could not be comprehensive. Some crucial issues need much more work - for example, the debate on discretionary licensing versus competitive bidding. Where the authors have done the work their policy conclusions are well argued and worth detailed consideration, but in other aspects supporting evidence is missing. The result is an unbalanced piece of work, the best parts of which show clearly that Professor Robinson and Dr Morgan could have done much better.
G~4. Mackay University of Aberdeen Aberdeen, UK
second, much larger, is a series of reviews of national energy programmes. It is hard indeed to differentiate between either their purpose or the facts reported in these two volumes. An energy researcher looking for data now has a wide choice, and were it not for the strong likelihood that each of the authorities producing international statistics copies from the other, there would be more confusion than there is. It is bad enough when one authority takes A D 2000 for its target datum and another A D 2020. confusion becomes confounded when some urban consumptions, for instance, are considered too small to consider - thus arriving at figures for combined heat and power, for example, that are meaningless when compared with established totals. The difference between inexperienced and incomplete statistical gathering is most marked when someone with even
ENERGY POLICY December 1978