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NO. 1

Autumn 2014

The Journal of Energy and Development
volume 40, number 1, autumn 2014 (copyright 2015)

J. C. Whorton and John Whorton, “Energy and the American West — From Remote Outposts to
the Global Spotlight,” The Journal of Energy and Development, volume 40, number 1 (autumn 2014,
copyright 2015), pp. 1-21.

In this article, the authors look at the evolving role of the American West as an increasingly important
global energy producer and the accompanying ramifications. This work focuses on the role of history,
geography, and growth trends that are affecting the West’s growing position as the apparent new
unofficial regulator for world crude-oil-market supplies and pricing benchmarks. Also addressed are some
of the contentious issues surrounding U.S. energy development including balancing competing agendas of
multiple stakeholders, water concerns, and environmental protection. Much of the future of the U.S. drive
for energy independence and its future role as an energy exporter will depend upon the present and future
energy development efforts and the resulting policies occurring in the American West. The authors
conclude that the U.S. West really does matter, and its role in resource development will be in the global
spotlight for decades to come.

Keywords: U.S. energy, American West, shale development

Issa Ali and Charles Harvie, “Oil-Related Shocks and Macroeconomic Adjustment under Different
Nominal Exchange Rate Policies: The Case of the Libyan Economy,” The Journal of Energy and
Development, volume 40, number 1 (spring 2014, copyright 2015), pp. 23-50.

This paper analyses the dynamic macroeconomic adjustment processes arising from oil production
rehabilitation for a small open economy such as that of Libya, operating under different nominal
exchange rate regimes with different degrees of capital mobility. The paper utilizes a general dynamic
macroeconomic framework to identify whether adverse Dutch disease consequences arising from oil
production recovery upon the nonoil trade balance could be alleviated by adopting an alternative nominal
exchange rate policy. The model utilized in this paper is likely to be of interest to other oil-exporting
developing economies with similar features. In particular, the model is also capable of incorporating
different degrees of international capital mobility, along with the adoption of either a fixed or flexible
nominal exchange rate regime. The results from this paper suggest that the impact on the competitiveness
of nonoil exports from oil-related shocks can be mitigated with a flexible nominal exchange rate system
as the real exchange rate only slightly appreciates throughout the adjustment path. Thus, Dutch disease
effects in the Libyan economy during its current period of oil production rehabilitation potentially can be
reduced by moving from a fixed to more flexible exchange rate regime. In addition, the flexible nominal
exchange rate benefits the private sector and offers larger benefits to nonoil production, arising from a
larger accumulation of public physical capital stock, human capital stock, imported capital stock, and
private capital stock.

Keywords: oil shocks, dynamic macroeconomic model, Dutch disease effects, fixed flexible exchange
rate regime, Libyan economy
Akihiro Watabe, “Biofuel Expansion in the Philippines: Impacts of Tax Credits and Blend
Mandate on the Economy,” The Journal of Energy and Development, volume 40, number 1 (autumn
2014, copyright 2015), pp. 51-72.

The Biofuels Act of the Philippines (Act) enacted in January 2007 mandates the use of biofuels as
vehicle fuels. The Act requires the use of locally produced sugarcane-based bioethanol for the blend
mandate while it provides the financial incentives for investing in bioethanol manufacturing through the
specific tax credit on biofuel and the value-added tax credit on the sales of raw materials for biofuel. This
paper examines the impact of the tax credits and blend mandate on the economy under the biofuel
expansion policy addressed in the Philippine National Renewable Energy Program. The impact of the
economy is measured by the value added associated with the production activities from sugarcane
cultivation to the biofuel supply. We found that the biofuel expansion policy increases gross domestic
product (GDP); however, the tax credits will adversely affect GDP. Furthermore, the technological
innovation that reduces the production costs of either sugarcane or bioethanol is more effective at
increasing GDP.

Keywords: biofuel, blend mandate, tax credits, value added, technological innovation, the Philippines

Rimma Subhankulova, Richard Wheeler, and Kirill Furmanov, “Gas Exports to the Countries of
the European Union and the Asia-Pacific Region,” The Journal of Energy and Development, volume
40, number 1 (autumn 2014, copyright 2015), pp. 73-98.

This paper will examine the current situation as related to the global trade of natural gas and will
draw some conclusions on how current developments will likely influence future trade and investment
patterns. It will start by considering the increased influence of developing countries on energy markets
and will continue by providing a detailed analysis of possible integration of energy markets, first within
the European Union and then within the Asia Pacific region. It will continue with an analysis of gas
production trends in Eurasia and the Middle East, two regions that are well-positioned to compete in both
the European and Asia Pacific energy markets, before considering the implications for the Russian
Federation, Qatar, and Turkmenistan. This contribution will then draw some conclusions based upon the
topics discussed.

Keywords: natural gas exports, competitiveness of gas exporting companies, energy outlook, natural gas
consumption per capita, cost of oil and gas production, shale gas, political sanctions and economic
restrictions in energy, global energy markets, OPEC, European Union, Asia Pacific Region, Qatar,
Qatargas, USA, Turkmenistan, Russian Federation, Ukraine, crisis in Ukraine, Middle Eastern and North
African states

Slim Mahfoudh and Mohamed Ben Amar, “The Importance of Electricity Consumption in
Economic Growth: The Example of African Nations,” The Journal of Energy and Development,
volume 40, number 1 (autumn 2014, copyright 2015), pp. 99-110.

In all the economies of the world, economic growth presents a solid indicator of development. Thus, it
is necessary to examine the factors influencing this growth. Many recent studies show that one of the
factors influencing economic growth is energy consumption. In this article, we examine the role of
electricity consumption, as a part of energy consumption, and its impact on economic growth on the
African continent. Our research incorporates a panel of 19 African countries covering the period from
1990–2010 from which we were able to identify, through the Solow and Swan and Mankiw, Romer, and
Weill models, that electricity consumption has a positive and statistically significant effect on economic
growth. Furthermore, using the Granger test, we can identify the existence of a unidirectional causality
indicating gross domestic product (GDP) variation which causes electricity consumption variation in

Keywords: electricity consumption, economic growth, panel, causality test, energy in Africa, Algeria,
Botswana , Cameroon, Congo, Côte d’Ivoire, Democratic Republic of Congo, Egypt, Ethiopia, Gabon,
Ghana, Kenya, Sudan, Morocco, Mozambique, Senegal, South Africa, Tanzania, Tunisia, Zambia

Santosh Kumar Sahu and K. Narayanan, “Energy Use Patterns and Firm Performance: Evidence
from Indian Industries,” The Journal of Energy and Development, volume 40, number 1 (autumn
2014, copyright 2015), pp. 111-130.

This paper is an attempt to understand the relationship between firm performances based on energy use
patterns of Indian manufacturing industries. Determinates of firm performance are estimated for the full
sample and for the sample of firms using similar energy sources: coal, natural gas, and petroleum.
Econometric analysis of the data collected from the Center for Monitoring Indian Economy (CMIE)
PROWESS at the firm level from 2005–2013 reveals that the determinants of profitability (measure of
firm performance) vary across the energy groups. Energy intensity is positively related to profitability for
three models except for the firms using natural gas. Research and development (R&D) intensity is
positively related to profitability for the full sample and for the firms using petroleum as the primary
source of energy. For the firms using coal as their primary source of energy, less R&D-intensive firms are
found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. On the
policy front, by shifting primary energy sources away from coal and petroleum to natural gas, firms can
become energy efficient and profitable.

Keywords: energy use, firm performance, Indian manufacturing, energy intensity, profitability, energy
efficiency, firm level, R&D, multinational enterprises (MNE)