The Cost of Natural Gas Shortages in Ireland
This paper investigates the economic implications of disruptions of one to ninety days to the supply of natural gas in Ireland. We assess the impact of a hypothetical gas supply disruption in both winter and summer in 2008 (with observed market characteristics) and in 2020 (with projected market characteristics). The cost of a natural gas outage includes the cost of natural gas being unavailable for heating and other purposes in the industrial and commercial sectors, lost consumer surplus in the residential sector, the cost of lost electricity in all sectors and lost VAT on the sale of gas and electricity. Ireland produces much of its electricity from natural gas and the loss of this electricity accounts for the majority of the cost of a natural gas outage. Losing gas-fired electricity would cost 0.1 to 1.0 billion euro per day, depending on the time of week, the time of year, and rationing of electricity. Industry should be rationed before households to minimize economic losses, but current emergency protocols favour industry. If gas-fired electricity is unavailable for three months, the economic loss could be up to 80 billion euro, about half of Gross Domestic Product. Losing gas for heating too would add up to approximately 8 billion euro in economic losses. We also discuss some options to increase Ireland's security of supply, and find that the cost is a small fraction of the avoided maximum damage.
|Date of creation:||Aug 2011|
|Contact details of provider:|| Postal: Whitaker Square, Sir John Rogerson's Quay, Dublin 2|
Phone: (353-1) 863 2000
Fax: (353-1) 863 2100
Web page: http://www.esri.ie
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Leahy, Eimear & Tol, Richard S. J., 2010.
"An Estimate of the Value of Lost Load for Ireland,"
WP357, Economic and Social Research Institute (ESRI).
- Yiping Ma & Sebastian Gonçalves & Sylvain Mignot & Jean-Pierre Nadal & Mirta B. Gordon, 2009. "Cycles of cooperation and free-riding in social systems," Working Papers hal-00349642, HAL.
- Scott, Susan & Lyons, Sean & Keane, Claire & McCarthy, Donal & Tol, Richard S. J., 2008. "Fuel Poverty in Ireland: Extent, Affected Groups and Policy Issues," Papers WP262, Economic and Social Research Institute (ESRI).
- Y. P. Ma & S. Gonçalves & S. Mignot & J.-P. Nadal & M. B. Gordon, 2009. "Cycles of cooperation and free-riding in social systems," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 71(4), pages 597-610, October.
- Baker, Paul & Blundell, Richard, 1991. "The Microeconometric Approach to Modelling Energy Demand: Some Results for UK Households," Oxford Review of Economic Policy, Oxford University Press, vol. 7(2), pages 54-76, Summer.
- Richard S.J. Tol, 2007. "The Value of Lost Load," Papers WP214, Economic and Social Research Institute (ESRI).
- Diffney, Sean & Lyons, Sean & Malguzzi Valeri, Laura, 2009. "Advertising to boost energy efficiency: the Power of One campaign and natural gas consumption," Papers WP280, Economic and Social Research Institute (ESRI).
- Damigos, D. & Tourkolias, C. & Diakoulaki, D., 2009. "Households' willingness to pay for safeguarding security of natural gas supply in electricity generation," Energy Policy, Elsevier, vol. 37(5), pages 2008-2017, May.
- Frank Asche & Odd Bjarte Nilsen & Ragnar Tveteras, 2008. "Natural Gas Demand in the European Household Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 27-46.
- Sharma, Atul & Chen, C.R. & Vu Lan, Nguyen, 2009. "Solar-energy drying systems: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1185-1210, August.
- Berkhout, Peter H. G. & Ferrer-i-Carbonell, Ada & Muskens, Jos C., 2004. "The ex post impact of an energy tax on household energy demand," Energy Economics, Elsevier, vol. 26(3), pages 297-317, May.
- de Nooij, Michiel & Koopmans, Carl & Bijvoet, Carlijn, 2007. "The value of supply security: The costs of power interruptions: Economic input for damage reduction and investment in networks," Energy Economics, Elsevier, vol. 29(2), pages 277-295, March.
- Zhang, Lixiao & Yang, Zhifeng & Chen, Bin & Chen, Guoqian, 2009. "Rural energy in China: Pattern and policy," Renewable Energy, Elsevier, vol. 34(12), pages 2813-2823.
When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:wp397. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns)
If references are entirely missing, you can add them using this form.