The supply and demand outlook for energy in the Asia—Pacific region

Years of strong economic growth in the Asia—Pacific region have resulted in unprecedented increases in energy demand in the region, particularly for oil and gas. The supply of oil and gas to the region will become more problematic as the decade progresses. Already 50% dependent on imported oil, this figure will rise to nearly 65% by 2000. Because high rates of domestic oil demand growth among traditional petroleum exporters - Indonesia. China and Malaysia - will absorb exportable surpluses, the region will find itself dependent on the Middle East for at least 90% of its imported oil needs by 2000. Currently linked to oil, LNG prices cannot justify the investments needed to bring new greenfield projects on line. With demand expected to exceed 67 million tonnes (Mt) in 2000 and 100 Mt in 2010. over 50 Mt of new capacity will be needed; satisfying this demand will necessitate a new pricing structure for LNG, raising the price substantially above the relative price of crude oil.     

Energy Conservation in Rapid-Growth Economies of Asia

Energy demand, including demand for petroleum, is expected to increase at a faster rate in the rapidly-developing nations of East and Southeast Asia than elsewhere in the world through the turn of the century. In the aggregate, the countries of this region are heavily dependent on imported oil, coal and natural gas. Rapid industrialization, electrification and increased consumer demand for energy-consuming durable goods and housing underlie the expected strong growth in energy consumption. Substantial scope for greater economy in energy-use exists in the industrial and transport sectors but effects in these areas will require effective management and institutional support in addition to getting prices right. In the context of balance of payments and external debt considerations, and the continued growth of energy consumption in East and Southeast Asia, improving energy conservation will be of great importance in lessening the likelihood that future economic development will be constrained by energy problems.     

The boom in mineral markets: How long might it last?

The commodity price boom that emerged in 2004 has proved far more persevering than its predecessors of 1950 and 1973. Some analysts have suggested that it may represent the start of a “supercycle” caused by the voracious raw materials demand from China and other emerging economies, with prices remaining high for 20-30 years. We offer an alternative explanation. For a variety of reasons, the establishment of new capacity in minerals and energy to match the accelerated demand trends is more time consuming than commonly assumed, and may take a decade or longer. As soon as the new capacity is in place, however, the boom will be punctuated. Prices may collapse much earlier in the event of a severe recession that cuts the growth in commodity demand.     

The outlook for oil

Between now and 2000, the demand for oil is expected to be moderate and the supply abundant. Economic growth is almost twice as slow as in 1973 and requires 25–30% less energy per unit of GNP. The demand for oil is therefore growing at a rate of two to three times slower. Meeting the demand for oil between now and 2000 is within the capability of the oil-producing countries, in many cases with modest additional investment. Gas and coal will be very cost competitive in relation to oil and will serve as a break on future explosive price increases.     

From the erosion of crude oil prices to reorganization of the oil industry

Comparison of data on world energy consumption for 1986, 1987 and 1988 indicates that the consumption of all forms of energy increased during the period, but the demand for oil increased at a lesser rate than that of other energy sources. Although the pattern varies between countries, the overall picture is one of increased use of natural gas, coal, nuclear and hydropower as an energy source. Part of the reason for the low growth in oil demand is the oil conservation measures put in place when oil was much more expensive, but may partly be due to the scepticism of many people about the future movement of oil prices. The likely continuation of a low growth market for oil has led some oil exporting countries to move downstream in an effort to secure a dependable market for their oil and oil products.     

World coal outlook: 1990s

In the 1990s for the newly industrializing nations of the Pacific Rim and for the OECD countries as well, the demand for energy is expected to increase at a rate in excess of that of the increase in GNP. The demand for coal is likely to increase as well but probably to a lesser degree than GNP. This is because coal can expect increasing competition not from oil, but from natural gas. For a whole host of reasons, economic as well as environmental, gas could be the preferred fuel of the 1990s. Nevertheless, coal prices can be expected to increase but low cost production due to come on stream shortly, is likely to keep those increases modest.     

Petroleum prospects and the need for international cooperation

A review of the world energy situation prior to the Persian Gulf War of 1990-91 shows that periods of oil price instability have distorted the decision-making process. During periods of high prices, investments were made in uneconomic energy sources and in periods of low prices few investments were made at all. To create a rational investment climate, international cooperation between consumers and producers of petroleum is essential. Such cooperation in the form of a forum could help to stabilize prices and assure that the economic decisions needed to meet future demand would be made in a secure framework.     

The Asia-Pacific petroleum market

The late 1980s saw an astonishing turnaround in the Asian oil market. After years of stagnation, three main factors - economic dynamism, lower oil prices and reduced government regulation of the market - resulted in a consumption surge that surprised even those analysts who had predicted such a recovery. The chronically capacity-surplus refining industry saw a leap in profitability, and new construction began. Rapid demand growth spread from the middle distillates to such formerly depressed products as gasoline and fuel oil, and naphtha markets began to expand again as the petrochemical industry resumed rapid growth. At the same time that demand has been rising and demand patterns have been shifting, other changes have begun. A new environmental awareness has taken root in Asia, and new environmental standards are being set almost daily, not only in the richer countries of East Asia, but also in many of the region's developing nations. Unfortunately, traditional sources of low-sulphur oil for power generation may be limited in the coming decade. Despite many new discoveries within the region, Asian crude availability is shrinking, both in terms of availability on the international market and in terms of percentage contribution to regional oil demand. After years of decreasing reliance, the region will face rapid increases in imports from the Persian Gulf in the 1990s.     

World phosphate supply

The Bureau of Mines investigated the resources, costs, capacities, market relationships, and short- and long-run supply of phosphate rock and phosphoric acid. The 206 mines and deposits evaluated in 30 market economy countries (MECs) contain an estimated 35.1 billion tonnes of recoverable phosphate rock (demonstrated resource level). US resources are sufficient to satisfy both the domestic market and an export market for phosphate products well beyond 2000. Resource depletion at current producers, however, means new property development (with higher costs) will be required if US production levels are to be maintained. Existing worldwide capacity can satisfy expected demand through the early 1990s. Expansion at existing mines or low demand growth could mean no new property development is required before the late 1990s. Worldwide, almost $8 billion could be required for the development of new phosphate rock properties between now and 2000, given 3% annual growth in demand. Though profit may not be the principal motivation for development of government-owned operations, most properties that could develop in the 1990s would require price increases of 20–50% to break even. To earn a 15% rate of return on investment, prices must rise to nearly double the $23–271 tonne US price level of 1988. Current US phosphate rock and phosphoric acid producers appear to be competitive (on a variable cost basis) with many other suppliers in major markets. New US properties will have higher variable costs than current producers; however, they are competitive with most projected new foreign development. The US phosphoric acid industry will most likely face increased competition as more of the foreign phosphate rock producers develop the capacity to process rock into phosphoric acid and other fertilizer products.     

Energy consumption trends in high growth Asian economies before and after 1986

In 1986, world oil prices declined sharply. Lower oil prices have been favourable to economic growth and price stability in Asia. However, oil consumption has also been growing rapidly in developing Asian countries including those dependent on imported oil. The increasing dependence on oil as a source of energy since 1986 is a striking reversal of the previous trend. In their pursuit of rapid industrialization, Asian countries have neglected energy conservation and diversification strategies. Unless energy policy is redirected, countries like Korea, Thailand and the Philippines could be seriously hurt by a sharp rise in oil prices. An increase in oil prices is almost inevitable in the next few years.     

Oil and gas reserves of the Middle East and North Africa

A quantitative estimate of the petroleum reserves of the Middle East and North Africa is presented and analysed in terms of the region's ability to meet current market demand for a sweet light crude. Costs of Middle East production are compared with those of other oil-producing regions. With an average costs of US$4/bbl, the Middle East has both the largest oil reserves and the lowest cost oil in the world. While new and improved technology of exploration and production may lessen this price advantage in the future, it will not eliminate it. Because of these two factors, the Middle East will continue to play an important role on the world energy stage well into the next century.     

Copper: after the boom

Copper demand is expected to turn down in the latter part of 1989 and then dip further in 1990. The slump in demand is expected to be modest, however, much less severe than the post oil shock recessions of the mid-1970s and early 1980s. By 1991 a healthy growth is expected to resume. However, major expansions to production capacity are in track and excessive production is expected to keep the copper market in surplus for the next five years. Thus, prices are expected to decline sharply and remain at quite low levels through the mid-1990s.     

International coal prices

The place coal will occupy among the world's energy supplies depends on many factors, including its price trends. This paper reviews recent price trends and supports the thesis that future coal prices are independent of oil prices, and that they will fluctuate between two limits which are based on production and transport costs in the USA and Australia.     

Corn-Based Ethanol Production and Environmental Quality: A Case of Iowa and the Conservation Reserve Program

Growing demand for corn due to the expansion of ethanol has increased concerns that environmentally sensitive lands retired from agricultural production and enrolled into the Conservation Reserve Program (CRP) will be cropped again. Iowa produces more ethanol than any other state in the United States, and it also produces the most corn. Thus, an examination of the impacts of higher crop prices on CRP land in Iowa can give insight into what we might expect nationally in the years ahead if crop prices remain high. We construct CRP land supply curves for various corn prices and then estimate the environmental impacts of cropping CRP land through the Environmental Policy Integrated Climate (EPIC) model. EPIC provides edge-of-field estimates of soil erosion, nutrient loss, and carbon sequestration. We find that incremental impacts increase dramatically as higher corn prices bring into production more and more environmentally fragile land. Maintaining current levels of environmental quality will require substantially higher spending levels. Even allowing for the cost savings that would accrue as CRP land leaves the program, a change in targeting strategies will likely be required to ensure that the most sensitive land does not leave the program.     

影响中国碳价的能源价格因素灰关联研究

本文选取中国碳排放价格数据和8种能源价格指数为研究变量,运用灰色关联方法研究了中国能源价格对中国碳价的影响。研究结果发现,化石能源价格对中国碳排放价格的影响较大,特别是煤炭、成品油和基础油价格对碳价的影响最大;低污染能源中,与天然气相比,液化气价格对中国碳排放价格影响明显。研究结果指出了保持碳市场价格稳定、防范价格异常波动的重要性,并从能源价格体系和能源消费结构角度提出了政策建议。     

Price prospects in Western Europe for internationally traded fossil fuels until 2000

A methodology for the long-term assessment of prices is designed and applied to the international markets for coal, oil and natural gas and likely price developments between 1990 and 2000 are explored. The coal market will remain competitive, and the long-term price will be determined by the total cost of marginal supply. The oil price will be set, even in the long term, substantially above the competitive level, by those who control the exceptional Middle East resource base. The traditional link between gas and oil prices will erode in the 1990s, and gas will be independently and competively priced by the turn of the century. Resource constraints are not expected to push prices upwards within the time horizon of the study. The relative price of gas will fall over the forecast period, and its market share will increase as a consequence.     

Investor demand and spot commodity prices

The on-going debate over the influence of investor demand on spot commodity prices largely attempts to assess this influence by measuring the growth in investor demand in recent years. Given the serious data problems that plague such analyses, this article pursues another approach in the hope of providing useful insights into the impact of investor demand on spot commodity prices. It focuses on the mechanisms by which investor demand affects spot prices, and in particular on two questions. First, how does an increase in investor demand on the futures markets affect the spot market and spot price? Second, when investor demand is increasing and pushing a commodity's price up, do physical stocks of the commodity also have to be rising, as economists and others widely assume?On the first question, the article concludes that a surge in investor demand raising prices on the futures markets will have a direct and comparable effect on the spot market prices when these markets are in strong contango. However, when markets are in weak contango or backwardation, price movements in the futures markets have a much looser effect on spot prices. As a result, changes in investor demand on the futures markets may have little or no influence on spot prices in the absence of a strong contango. Instead, changes in fundamentals (that is, producer supply and consumer demand) and possibly changes in investor demand taking place directly on the spot market largely determine the spot price at such times.On the second question, the article shows that investor demand can be pushing up a commodity's price even when investor stocks are falling, despite the widespread presumption to the contrary.     

Canadian manufacturing: The impacts of natural resource price increases on input demands and costs

The separate effects of 50% increases in the prices of energy, renewable and nonrenewable natural resource inputs on factor demands and production costs are simulated for Canadian total manufacturing and six two-digit industries. Both renewable and nonrenewable natural resource price increases have a substantially greater effect upon the demands for other factors and upon production costs than a parallel energy price increase. These results are important from a policy perspective and justify the further disaggregation of inputs in this and in other models of input demand.     

Irrigation pricing policies and its impact on agricultural inputs demand in Tunisia: a DEA-based methodology

This paper estimates farmers' individual irrigation water demand functions employing the information hidden in individual farmers' technical efficiency. This information is extracted through the development of a new deductive methodology based on inverse Data Envelopment Analysis (DEA) models. The empirical results for Tunisia show that farmers who are more technically efficient have less elastic irrigation water demand functions; these farmers would adjust demand only to a limited extent and they can afford the water price. In contrast, water pricing significantly affects those that are less efficient. These farmers shift towards a different cropping pattern using significantly less water and more land when the price of water increases. Thus, higher water prices would threaten this category's livelihood if their efficiency is not improved. However, if the technical efficiency of these farmers were to improve, then it would be more difficult to reach water saving objectives since their demand will also become highly inelastic. The findings have important implications in view of the objectives of Tunisia water policy which include:full cost recovery, continuity of the irrigation activity, and water saving at the national level.     

Restructuring of Eastern Europe and its possible consequences for atmospheric environment

The environmental situation in the (former) communist countries of Eastern Europe is threatening. How will the political and economical restructuring affect the environmental conditions? This article investigates the consequences for air pollution resulting from energy uses over the next 5 yr. Since abatement investments seem unfeasible (with the exception of the former GDR) financially and to some extent also technically, the assessment of energy demand is crucial. Explicitly accounting for market prices shows that emissions will substantially decline due to conservation and the substitution of the cleaner fuel natural gas for “dirty” coal.