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Europe and world energy
To this effect, the three groups of countries interested in oil trade OPEC, OECD and the non-oil developing countries - should participate, if possible on a par basis, in an International Energy Council. This generous proposal, 1 submit, would meet with the same obstacles as the defunct North-South Dialogue. The order of priority would be for the industrialized countries to debate between themselves on their policy goals pertaining both to energy and to the connected Middle East problems. A start has been made at the 1979 and 1980 summit meetings. A permanent secretariat serving the summits could play a useful role of consultation, coordination and policy planning. One can regret that Hanns Maul1 has not analysed the internal obstacles to a community energy policy and also the divergences between the Americans and the Europeans in dealing with the wider energy issues and with the crucial Middle East imbroglio. A basic agreement between the USA, Japan and the four larger European states participating in the summit meetings is a prerequisite to an approach to the producer states and a means of avoiding the bilateral arrangements so rightly criticized by the author.
Book review EUROPE AND WORLD
ENERGY
Hanns Maul1 Butterworths,
London,
l980,342pp,
f 16.50
Hanns Maul1 has been working on energy problems since 1974, first at the Sussex European Research Centre, then as secretary to the Trilateral Commission and joint rapporteur of the 1978 Triangle Paper’ entitled: ‘Energy: Managing the Transition’. Quite appropriately he has put the European energy problem in a world setting. His book is based on a thorough documentation and follows a rigorous approach. The first part sets the scene, describing the position of Europe as a producer and as an importer of energy. On coal, Hanns Maul1 expects little more than stabilization of production, a revival in the future being linked to gasification. On nuclear energy he doubts the competitiveness of the industry because of increasing capital costs and stringent safety regulations. He also questions the growth of demand for electricity and concludes that nuclear energy should be expanded very cautiously. Having disposed of the domestic substitutes to oil and gas, the author then concentrates on energy imports. He believes that an overall import dependence of about 50% is the minimum obtainable for the European Community. The trade relationship between the nine countries and their suppliers of oil and gas is therefore of primary importance. It is dealt with in part two both from a power relationship and from the viewpoint of the political economist in a developing country. Maul1 insists quite rightly on the fact that the dependence on exports of a non-renewable resource creates a serious security problem in the medium term. Therefore Europe and her suppliers are in a position of mutual vulnerability. The many potential conflicts deriving from this position stress the need for crisis management. Part three analyses the objectives for a European energy policy. They fall into the three classic categories of security of supplies, long-term availability of supplies and price formation and evolution. The Inter-
198
national Energy Agency (IEA) allocation scheme attends only to immediate security implications. The long-term availability depends on the process of economic development of the main suppliers of the Community. A perceptive study of the policies and prospects of Algeria, Iran, Iraq, Nigeria, Lybia, Kuwait and Saudi Arabia reveals the specific goals and constraints of each producer state. The chapter on prices offers an excellent theoretical analysis illustrated by a historical survey. What are the prospects for price and control in the present international energy system? The author reviews the position of the main participants: the companies, tempted by diversification away from oil; OPEC whose policy decisions over price are limited by the risk of a world economic crisis and by the need for political support from the industrialized countries (a somewhat optimistic assertion); and the USA which ‘now appears as a guarantor to assure the success of the development policy of Saudi Arabia’. The major difficulty lies in harmonizing the time frame of national energy policies. What is required is a global management of energy problems - the subject of part four of the book. Some attempts have been made and have failed or were too limited in scope: the North-South dialogue; the EuroArab dialogue; and the LomC Convention. ‘The real task facing the international system is the control and management of energy insecurity’.
Guy de Carmoy INSEAD Fontainebteau France
’ Triangle Paper No 17, The Trilateral Commission, Washington, DC, 1978.
Recent papers D. Aigner and 1. Hausman, ‘Correcting for truncation bias in the analysis of experiments in time-of-day pricing of electricity’, The Bell Journal of Economics, Vol II, No 1, Spring 1980, pp 131-142.
D. W. Caves and L. R. Christensen, ‘Econometric analysis of residential time-of-use electricity pricing experiments’, Journal of Econometrics, Vol 14, No 3, December 1980, pp 287-306.
J. Burbidge and A. Harrison, ‘Testing for the inflationary and recessionary effects of oil price rises: a time series analysis for the UK’, Working paper 80-02, Department of Economics, McMaster University, February 1980, 39 PP.
Stavros Constantinou, ‘Electrical energy bright light on the horizon’, The CQnQdiQnBusiness Review, Vo17, No 4, Winter 1980, pp 3 l-34. R. H. Day, ‘Supply models with feedback features’, 4 Vols, Economics
ENERGY
ECONOMICS
July 1981
Book review EUROPE AND WORLD
ENERGY
Hanns Maul1 Butterworths,
London,
l980,342pp,
f 16.50
Hanns Maul1 has been working on energy problems since 1974, first at the Sussex European Research Centre, then as secretary to the Trilateral Commission and joint rapporteur of the 1978 Triangle Paper’ entitled: ‘Energy: Managing the Transition’. Quite appropriately he has put the European energy problem in a world setting. His book is based on a thorough documentation and follows a rigorous approach. The first part sets the scene, describing the position of Europe as a producer and as an importer of energy. On coal, Hanns Maul1 expects little more than stabilization of production, a revival in the future being linked to gasification. On nuclear energy he doubts the competitiveness of the industry because of increasing capital costs and stringent safety regulations. He also questions the growth of demand for electricity and concludes that nuclear energy should be expanded very cautiously. Having disposed of the domestic substitutes to oil and gas, the author then concentrates on energy imports. He believes that an overall import dependence of about 50% is the minimum obtainable for the European Community. The trade relationship between the nine countries and their suppliers of oil and gas is therefore of primary importance. It is dealt with in part two both from a power relationship and from the viewpoint of the political economist in a developing country. Maul1 insists quite rightly on the fact that the dependence on exports of a non-renewable resource creates a serious security problem in the medium term. Therefore Europe and her suppliers are in a position of mutual vulnerability. The many potential conflicts deriving from this position stress the need for crisis management. Part three analyses the objectives for a European energy policy. They fall into the three classic categories of security of supplies, long-term availability of supplies and price formation and evolution. The Inter-
198
national Energy Agency (IEA) allocation scheme attends only to immediate security implications. The long-term availability depends on the process of economic development of the main suppliers of the Community. A perceptive study of the policies and prospects of Algeria, Iran, Iraq, Nigeria, Lybia, Kuwait and Saudi Arabia reveals the specific goals and constraints of each producer state. The chapter on prices offers an excellent theoretical analysis illustrated by a historical survey. What are the prospects for price and control in the present international energy system? The author reviews the position of the main participants: the companies, tempted by diversification away from oil; OPEC whose policy decisions over price are limited by the risk of a world economic crisis and by the need for political support from the industrialized countries (a somewhat optimistic assertion); and the USA which ‘now appears as a guarantor to assure the success of the development policy of Saudi Arabia’. The major difficulty lies in harmonizing the time frame of national energy policies. What is required is a global management of energy problems - the subject of part four of the book. Some attempts have been made and have failed or were too limited in scope: the North-South dialogue; the EuroArab dialogue; and the LomC Convention. ‘The real task facing the international system is the control and management of energy insecurity’.
Guy de Carmoy INSEAD Fontainebteau France
’ Triangle Paper No 17, The Trilateral Commission, Washington, DC, 1978.
Recent papers D. Aigner and 1. Hausman, ‘Correcting for truncation bias in the analysis of experiments in time-of-day pricing of electricity’, The Bell Journal of Economics, Vol II, No 1, Spring 1980, pp 131-142.
D. W. Caves and L. R. Christensen, ‘Econometric analysis of residential time-of-use electricity pricing experiments’, Journal of Econometrics, Vol 14, No 3, December 1980, pp 287-306.
J. Burbidge and A. Harrison, ‘Testing for the inflationary and recessionary effects of oil price rises: a time series analysis for the UK’, Working paper 80-02, Department of Economics, McMaster University, February 1980, 39 PP.
Stavros Constantinou, ‘Electrical energy bright light on the horizon’, The CQnQdiQnBusiness Review, Vo17, No 4, Winter 1980, pp 3 l-34. R. H. Day, ‘Supply models with feedback features’, 4 Vols, Economics
ENERGY
ECONOMICS
July 1981