energy issues Flashcards
as of 2019 who produced the most crude oil
US
what is the greatest source of electricity in the us
fossil fuels
greatest renewable energy production by source (top 5)
hydro wood biofuels wind solar
allocation of nonrenewable resources
MC and price increase over time
depletion occurs steadily but never runs out
switch to other energy sources
eventually will rely on renewable resources
natural monopoly
natural gas and electricity markets
firm that experiences decreasing average costs as it expands outwards
economic theory for regulation
one firm can produce a given output level cheaper than many firms
competition will be lost
natural gas history
regulated since 1930s
shortages of 60s and 70s
federal energy regulatory commission in 1985
- formally distinguished and separated the pipeline merchant and transportation functions
results of deregulation
spot markets developed
natural gas futures trading
sport markets prices rapidly converged
key: developed into one market
deregulation mid 90s to current
unbundling services of generation, transmission, and distribution
spot markets developed
average cost pricing
regulated averaged higher cost sources with lower costs
solution: peak-load pricing, utilities are investing in consumer conservation
why is oil a natural security problem
vulnerable strategic import have a cost which is not reflected in the market
national security is a public good
