Page 17 - Driving Force for Energy Demand
P. 17
ving Forces for Energy Demand 2010
3. Policy and Pricing Implications
Energy is essential to the economic activity that sustains and improves the
quality of life (National Petroleum Council: Raymond, 2007). As such, growth in
the use of energy is essential if billions of people living in the developing world
are to see improved living standards and as a result, quality of life. By providing
reliable and affordable energy, policy makers will help revitalize economies and
enable broad economic gains around the world. As shown in the energy demand
section, demand in non-OECD countries, has with the exception of China been
increasing more than linearly with respect to income. This shows that countries
face increasing energy intensity during their development path as they climb the
energy ladder, as shown in graph 2-3 The Energy Ladder and 2-4 The Energy
Ladder S-Curve. How energy intensity will grow is affected by a number of factors
such as geographical location, size, and climatic exposure. In addition, factors
such as industrial structure, efficiency and mass mobility solutions are significant
and are the results of explicit economic and policy choices made by countries
(Benthem & Romani, 2009). These are important factors to take into account
when building an energy policy. Further, it has been shown that energy demand
is more responsive to end-use price rather than international oil price changes.
This is because taxes, subsidies and losses from transportation and conversion
vary widely across countries and has a large impact on the end user price
(Benthem & Romani, 2009). In addition, the magnitude of demand responses to
price changes is substantial in the developing world, varying more than linearly
with price levels. This
3-1 Correlation Between International Oil Price indicates that the steeper the
end-use price increase, the
Index and Domestic End-Use Energy Price Index stronger the marginal
reduction in energy demand
Non- OECD -14 % China 19 % Malaysia 58 % which indicates a higher
Indonesia -7 % Peru degree vulnerability of
Mexico -1 % Algeria 20 % Chile 61 % developing countries to
India 6 % Pakistan increasing energy prices
Romania 10 % Colombia 33 % Thailand 68 % (Benthem & Romani, 2009).
Brazil 16 % Venezuela
Argentina 36 % Sri Lanka 76 %
41 % South Korea 77 %
46 % Philippines 83 %
OECD 93 %
US 60% - 90%
Western Europe
(Benthem & Romani, 2009)
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 17
3. Policy and Pricing Implications
Energy is essential to the economic activity that sustains and improves the
quality of life (National Petroleum Council: Raymond, 2007). As such, growth in
the use of energy is essential if billions of people living in the developing world
are to see improved living standards and as a result, quality of life. By providing
reliable and affordable energy, policy makers will help revitalize economies and
enable broad economic gains around the world. As shown in the energy demand
section, demand in non-OECD countries, has with the exception of China been
increasing more than linearly with respect to income. This shows that countries
face increasing energy intensity during their development path as they climb the
energy ladder, as shown in graph 2-3 The Energy Ladder and 2-4 The Energy
Ladder S-Curve. How energy intensity will grow is affected by a number of factors
such as geographical location, size, and climatic exposure. In addition, factors
such as industrial structure, efficiency and mass mobility solutions are significant
and are the results of explicit economic and policy choices made by countries
(Benthem & Romani, 2009). These are important factors to take into account
when building an energy policy. Further, it has been shown that energy demand
is more responsive to end-use price rather than international oil price changes.
This is because taxes, subsidies and losses from transportation and conversion
vary widely across countries and has a large impact on the end user price
(Benthem & Romani, 2009). In addition, the magnitude of demand responses to
price changes is substantial in the developing world, varying more than linearly
with price levels. This
3-1 Correlation Between International Oil Price indicates that the steeper the
end-use price increase, the
Index and Domestic End-Use Energy Price Index stronger the marginal
reduction in energy demand
Non- OECD -14 % China 19 % Malaysia 58 % which indicates a higher
Indonesia -7 % Peru degree vulnerability of
Mexico -1 % Algeria 20 % Chile 61 % developing countries to
India 6 % Pakistan increasing energy prices
Romania 10 % Colombia 33 % Thailand 68 % (Benthem & Romani, 2009).
Brazil 16 % Venezuela
Argentina 36 % Sri Lanka 76 %
41 % South Korea 77 %
46 % Philippines 83 %
OECD 93 %
US 60% - 90%
Western Europe
(Benthem & Romani, 2009)
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose. Page 17
