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The economics of promoting security of energy supply

Author

Listed:
  • Mulder, Machiel

    () (CE Delft.)

  • ten Cate, Arie

    () (CPB Netherlands Bureau for Economic Policy Analysis)

  • Zwart, Gijsbert Zwart

    () (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This paper analyses the welfare effects of two policies directed at the security of energy supply: investments in strategic petroleum reserves and a cap on the production of gas from the largest Dutch gas field. Market failures can justify such policies, in particular failure of individual consumers to account for their impact on energy prices and import dependency and, hence, the vulnerability of a country to geopolitical conflicts. But as the costs of investing in strategic reserves and capping gas production are not negligible, these options are welfare enhancing only in specific circumstances. Generally, measures to improve the functioning of energy markets promise to achieve more than investment-intensive measures or those restricting options of profit-maximising agents. However, policy makers might find it politically expedient to adopt rather than reject inefficient security-of-supply policies.

Suggested Citation

  • Mulder, Machiel & ten Cate, Arie & Zwart, Gijsbert Zwart, 2007. "The economics of promoting security of energy supply," EIB Papers 8/2007, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibpap:2007_008
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    Citations

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    Cited by:

    1. Arie ten Cate, 2010. "Hourglass models of world-wide problems such as climate change," CPB Memorandum 238, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Winzer, Christian, 2012. "Conceptualizing energy security," Energy Policy, Elsevier, vol. 46(C), pages 36-48.
    3. Kamonphorn Kanchana & Hironobu Unesaki, 2015. "Assessing Energy Security Using Indicator-Based Analysis: The Case of ASEAN Member Countries," Social Sciences, MDPI, Open Access Journal, vol. 4(4), pages 1-47, December.

    More about this item

    Keywords

    Strategic reserve; energy policy; cost-benefit analysis;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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