- Email: [email protected]
Energy today and tommorrow: Living with uncertainty
Book reviews
and discussion of other factors such as differences in the quality of coal available and desires for supply diversification necessary to validate the forecasts. These defects greatly reduce the value of the study. What might have been the intelligent investors' primer on opportunities and risks in Australian coal proved to be only the curious executive's introduction to the subject. The persistence of such expensive cursory surveys proves that such needs can profitably be served. Those with more limited budgets may prefer to look elsewhere for somewhat simpler but much cheaper discussions such as those by Abelson's colleague at Macquarie, Donald W. Barnett,
who among other things has engaged in extensive efforts to measure and project the Australian coal supply curve. 2
Richard L. Gordon Department of Mineral Economics The Pennsylvania State University, USA 1Martin B. Zimmerman, The US Coal Industry: The Economics of Policy Choice, The MIT Press, Cambridge, MA, 1981,205 PP. 2Among Donald Bamett's works are Minerals and Energy in Australia, Cassell, Sydney, 1979, 333 pp, and with J.P. Hemphill, The Minerals Induslry in Australia, 1970-80: A Paltem for Growth, ASEAN-Australian Economic Relations Research Project, Australian Departmentof Resources and Energy, Canberra, 1984, 502 pp.
Energy economics issues ENERGY TODAY AND TOMORROW: Living with Uncertainty by Joel Darmstadter, Hans H. Landsberg, Herbert C. Morton with Michael J. Coada Prentice-Hall, Englewood Cliffs, NJ, 1983, 254 pp, £12.55 paperback One of the factors which makes the study of energy economics so interesting and rewarding is the wide variety and richness of problems to be analysed and considered. These problems range over questions of optimal resource allocation (both intra- and intertemporally), the role of the market, the role of government, questions of equity, problems of externalities, irreversible effects, taxation of economic rents, etc. A common feature of these problems is the pervasive influence of uncertainty, which is sometimes regarded as one of the distinguishing features of energy economics.
Broad subject Specialists in energy economics are conscious of both the broad vista covered by their subject and the difficulty of providing new students with introductory reading material which captures the richness and scope of energy economics. Fortunately this 232
gap has now been closed with the publication of Energy Today and Tomorrow, which was written by a team from Resources for the Future. This book is to be viewed as a primer on energy economics, but only" in the sense that it is concerned with the identification and assessment of energy issues in the 1980s and beyond from an economic perspective. While adopting this perspective, the authors quite correctly, in this reviewer's opinion, devote considerable space to informing the reader about the importance of political, social and technological factors in the assessment of energy issues. In this way the reader is introduced to the considerable complexity of many energy issues and to many of the data problems and ethical judgements which must be faced when considering many energy policy problems. As might be expected, the book is written from a US perspective. It consists of seven chapters plus an epilogue and a glossary. The first considers why energy was elevated to one of society's major concerns in the 1970s, and reviews the US energy situation at the beginning of the 1980s. Chapter 2 considers the ways in which energy is used in the USA, and reviews the meaning of efficiency with respect to energy use. Various issues relating to energy supply are consi-
dered in Chapter 3, and questions relating to research and development are discussed in Chapter 4. The roles of the market and of the government in energy policy are dealt with in Chapter 5, while Chapter 6 discusses environmental issues. Chapter 7 looks at various international issues associated with energy, including problems of developing countries and of supply insecurity. The epilogue is concerned with a number of key issues in US energy policy, eg the choice between 'hard' and 'soft' energy futures, protection of the environment, and with making the reader consider them analytically. One of the most welcome features of this book when viewed as a primer on energy economics is the balanced aproach adopted by the authors, which can be illustrated by a few e x a m p l e s . T h e d e v e l o p m e n t of OPEC, its objectives and policy instruments are discussed, and contrasted with the US belief that, to the extent possible, the marketplace should be governed by competition between independent producers. The authors point out, though, that when demand for oil was slack in the 1930s, the oil and gas producing states, led by Texas, in effect established a set of state-controlled cartels to control production and prevent prices falling. A second example concerns the role of government. Although emphasis is placed on the role of the market, the authors stress that unregulated markets are not inherently efficient and that government intervention will sometimes be necessary. They suggest that mulch energy research and development will require government involvement, since much research needs to be undertaken into topics in which the energy industries appear uninterested, or else they lack the capacity to undertake it. Examples include more efficient energy use in buildings, and nuclear fusion. This book can be strongly recommended to those seeking an introductory overview of energy issues in the 1980s and the role and importance of economics in dealing with them. Michael G. Webb Oxford Institute for Energy Studies
E N E R G Y POLICY June 1984
and discussion of other factors such as differences in the quality of coal available and desires for supply diversification necessary to validate the forecasts. These defects greatly reduce the value of the study. What might have been the intelligent investors' primer on opportunities and risks in Australian coal proved to be only the curious executive's introduction to the subject. The persistence of such expensive cursory surveys proves that such needs can profitably be served. Those with more limited budgets may prefer to look elsewhere for somewhat simpler but much cheaper discussions such as those by Abelson's colleague at Macquarie, Donald W. Barnett,
who among other things has engaged in extensive efforts to measure and project the Australian coal supply curve. 2
Richard L. Gordon Department of Mineral Economics The Pennsylvania State University, USA 1Martin B. Zimmerman, The US Coal Industry: The Economics of Policy Choice, The MIT Press, Cambridge, MA, 1981,205 PP. 2Among Donald Bamett's works are Minerals and Energy in Australia, Cassell, Sydney, 1979, 333 pp, and with J.P. Hemphill, The Minerals Induslry in Australia, 1970-80: A Paltem for Growth, ASEAN-Australian Economic Relations Research Project, Australian Departmentof Resources and Energy, Canberra, 1984, 502 pp.
Energy economics issues ENERGY TODAY AND TOMORROW: Living with Uncertainty by Joel Darmstadter, Hans H. Landsberg, Herbert C. Morton with Michael J. Coada Prentice-Hall, Englewood Cliffs, NJ, 1983, 254 pp, £12.55 paperback One of the factors which makes the study of energy economics so interesting and rewarding is the wide variety and richness of problems to be analysed and considered. These problems range over questions of optimal resource allocation (both intra- and intertemporally), the role of the market, the role of government, questions of equity, problems of externalities, irreversible effects, taxation of economic rents, etc. A common feature of these problems is the pervasive influence of uncertainty, which is sometimes regarded as one of the distinguishing features of energy economics.
Broad subject Specialists in energy economics are conscious of both the broad vista covered by their subject and the difficulty of providing new students with introductory reading material which captures the richness and scope of energy economics. Fortunately this 232
gap has now been closed with the publication of Energy Today and Tomorrow, which was written by a team from Resources for the Future. This book is to be viewed as a primer on energy economics, but only" in the sense that it is concerned with the identification and assessment of energy issues in the 1980s and beyond from an economic perspective. While adopting this perspective, the authors quite correctly, in this reviewer's opinion, devote considerable space to informing the reader about the importance of political, social and technological factors in the assessment of energy issues. In this way the reader is introduced to the considerable complexity of many energy issues and to many of the data problems and ethical judgements which must be faced when considering many energy policy problems. As might be expected, the book is written from a US perspective. It consists of seven chapters plus an epilogue and a glossary. The first considers why energy was elevated to one of society's major concerns in the 1970s, and reviews the US energy situation at the beginning of the 1980s. Chapter 2 considers the ways in which energy is used in the USA, and reviews the meaning of efficiency with respect to energy use. Various issues relating to energy supply are consi-
dered in Chapter 3, and questions relating to research and development are discussed in Chapter 4. The roles of the market and of the government in energy policy are dealt with in Chapter 5, while Chapter 6 discusses environmental issues. Chapter 7 looks at various international issues associated with energy, including problems of developing countries and of supply insecurity. The epilogue is concerned with a number of key issues in US energy policy, eg the choice between 'hard' and 'soft' energy futures, protection of the environment, and with making the reader consider them analytically. One of the most welcome features of this book when viewed as a primer on energy economics is the balanced aproach adopted by the authors, which can be illustrated by a few e x a m p l e s . T h e d e v e l o p m e n t of OPEC, its objectives and policy instruments are discussed, and contrasted with the US belief that, to the extent possible, the marketplace should be governed by competition between independent producers. The authors point out, though, that when demand for oil was slack in the 1930s, the oil and gas producing states, led by Texas, in effect established a set of state-controlled cartels to control production and prevent prices falling. A second example concerns the role of government. Although emphasis is placed on the role of the market, the authors stress that unregulated markets are not inherently efficient and that government intervention will sometimes be necessary. They suggest that mulch energy research and development will require government involvement, since much research needs to be undertaken into topics in which the energy industries appear uninterested, or else they lack the capacity to undertake it. Examples include more efficient energy use in buildings, and nuclear fusion. This book can be strongly recommended to those seeking an introductory overview of energy issues in the 1980s and the role and importance of economics in dealing with them. Michael G. Webb Oxford Institute for Energy Studies
E N E R G Y POLICY June 1984