ENERGY ECONOMICS REVIEW
Year:2011 | Volume:8 | Issue:29|Papers Count:8

Environmental cost–benefit analysis is applied for the evaluation of renewable energy projects. Since some benefits and costs do not have market values, it is imperative to apply economic valuation techniques in order to estimate them. The need for investment in renewable energies is apparent, considering the earth’s finite resources and their fast depletion. Fossil fuels draw on finite resources, which eventually dwindle, become too expensive or too environmentally detrimental to retrieve. It is of considerable interest to policy makers to know if individuals are willing to pay more for renewable energies rather than for fossil fuel energy.Choice experiment method is applied in the valuation of non-market goods. This paper estimates the willingness to pay for a hypothetical program that promotes the utilization of renewable energies. Using the choice experiment method, we estimate preferences of respondents for electricity produced using renewable energy resources. Responses to the choice questions show that our respondents favor policies promoting the utilization of renewable energies and strongly approve of the reduction of pollution caused by thermal power plants.Our results, therefore, suggest that consumers are willing to pay a higher price for electricity in order to internalize the external costs of energy security, climate change, and air pollution caused by thermal power plants. On the other hand, these results show that as incomes increase willingness to pay increases, while the willingness to pay is negatively associated with age and education has no significant effect on WTP.

Given the impact of oil price volatility on different aspects of Iranian economy and importance of financial markets in growth and economic development, this paper studies the impact of oil price shocks on stock returns of Tehran Stock Exchange over the period from February 1997 to August 2009. The study uses Wavelet analysis (in order to reduce noise of time series data) and Markov Switching Vector Autoregressive (MS-AR) approach. We show that oil price shocks positively affect stock returns during bull markets whether with high or low volatiliy and recession phases of stock return with high volatility. However, oil price shocks have a negative correlation with stock returns during recession phases of stock returns with limited volatility. The empirical findings will prove extremely useful to investors and policy makers who need to detect the exact effect of oil price changes on stocks return.

The petrochemical industry as a principal component of the oil sector is an important, basic industry in Iran. This industry has a critical role in Iran's economic development and diversification away from oil, given the opportunities it offers for internalizing technology and expansion of associated industries, both as suppliers and as users of its products. This is why the current study assesses technical efficiency and productivity in petrochemical plants in Iran utilizing the DEA method and Malmquist Index. The results indicate that under assumption of constant returns and variable during years 2002-2008, the average value of technical efficiency of petrochemical plants were 55.7 and 64.4 percent respectively.The Borzouye and Khouzestan plants, respectively with 100 and 4.4 percent, have the highest and lowest technical efficiency amongst Petrochemical plants. The average productivity growth in the selected petrochemical plants was equal to 34.7 percent during years 2002-2008, with 18.3 percent of the growth due to improvements in technology and 13.9 percent due to improvements in technical efficiency. It is thus clear that the most important factor making for increasing productivity is technological change.

The goal of this paper is to test the practicality of forming an energy efficiency market as a mechanism to promote energy efficiency while reducing the cost of energy saving measures. In order to do this we use the “theory of a market for permits” and “Energy efficiency Certificate Market” to determine the requirements of such a market. This paper we refer to the experience with permit markets in various fields, markets for renewable energy credits, and the market for white certificates in advanced countries to define such a potential market for energy efficiency in Iran. We start by defining a set of energy efficiency standards that companies are obliged to attain. Through establishing an energy efficiency credits market, firms are able to trade their credits, thus minimizing the cost of energy saving measures at the national and firm levels. Based on the estimated costs of energy saving measures contained in energy audit reports of units manufacturing bricks, the total national cost for achieving the set energy efficiency standards, in case of a market for trading energy efficiency certificates will be 20847.335 rials per ton, while in the absence of such a market, the total cost for achieving the same standards will be equal to 32003.785 rials per ton. The study thus confirms the potential of such markets in reducing the cost of energy saving measures.

Crude oil as the main energy carrier plays a crucial role in Iran’s economy. Hence, a study of factors influencing the supply side of Iranian crude oil is worthwhile. The present study attempts to survey the trend of Iranian crude oil supply in the period 1967-2007 using a hybrid model. The findings of this study indicate that, in the short run, there is a negative correlation between crude oil prices and the amount of crude oil produced, however in the long run, the corresponding correlation is positive. Moreover, it is shown that in this period, investments in the Iranian oil and gas sector have not had a meaningful impact on the quantity of oil and gas supplied by Iran. Crude oil supply from Iran has been affected by OPEC crude oil quota system since their introduction and implementation. This is indicated by the fact that any increase in the OPEC quotas has led to an increase in Iran’s crude oil supply while supply from Iran has dropped as a result of any decrease in OPEC quotas. The findings also reveal that the 1973 oil shock had a positive impact on the quantity of crude oil supplied by Iran while the Iraqi imposed war against Iran led to a fall in crude oil supply by Iran.

Many factors affect oil prices. Policies and actions by OPEC, as the most important organization in the oil market, are among these factors. OPEC has been stabilizing the market by adjusting member's production quotas in response to unusual upward or downward price movements. When the market confronts shortage of supply or a increase in demand, OPEC can stabilize the market by using its spare capacity production. Whenever OPEC's spare capacity is not enough to compensate shortage of oil supply, a spike in oil prices will occur. For example in the years since 2002m with decreased spare capacity, oil prices have been under an upward pressure.In this paper the relationship between OPEC's spare capacity and oil prices is investigated theoretically and empirically. To this end, we apply the VECM model to monthly data covering the 1994-2009 period. The results indicate a weak relationship during the high spare capacity period 1994-2002, while spare capacity acquired a determinant role on oil prices over the reduced spare capacity period 2003-2009.The results also indicate that in the latter sub-period speculative behaviors have became an additional influential factors determining oil prices. Meanwhile the study concludes that number of days of reserve coverage for forward demand in OECD countries is the most important factor affecting oil prices.

The main purpose of this paper is to present evidence on the relationship between energy intensity and selected firm characteristics in the manufacturing industry of Iran. The analysis uses econometric methods is performed on a cross-sectional sample of 12298 firms, classified by manufacturing sector. The results indicate that there is a direct relationship between energy intensity and firm size, this may be Due to all major large enterprises being state-owned. The analysis also brings out the finding that ownership type is also an important determinant of energy intensity and results do confirmed that private owned enterprises are less energy intensive. We find that R&D activities are not important contributors to the decline in firm level energy intensity. We also identified that capital intensity and wage have positive impact on energy intensity of industrial firms.

Oil and gas are substitute commodities to meet energy needs and their markets are thus interrelated with increasingly fierce competition between them. Recent spikes and shocks in the energy markets necessitate the in-depth study of various aspects of the relationship between oil and gas markets as two main sources of energy. We thus use weekly price data to investigate long and short-run oil and gas markets and the relationship between their respective volatilities and spillover of volatility from one market to the other. We use the ARDL-GARCH method to simultaneously study the behavior of long and short run markets taking into account their volatility. The results confirm the existence of a long term relationship between the two markets. Oil prices act as a weak exogenous variable in determining gas prices in the long run. While in the short term it is gas prices that influence oil prices. In addition, we see that volatility of gas prices has a spillover effect on volatility of oil prices while the relationship does not hold the other way around.