- Elgar original reference
Edited by Jeroen C.J.M. van den Bergh
12 The economics of energy Jan Willem Velthuijsen and Ernst Worrell 1. The role of energy in society Energy plays a crucial role in today’s society. It is an essential commodity for households throughout the world, for heating, cooling, cooking, lighting, transportation and for numerous other activities. Moreover energy is a production factor of eminent importance in virtually all sectors of industry. The need for energy has closely followed accelerated world growth in population and economic activity. Energy has obtained an enormous strategic value. The safeguarding of energy supplies has even led countries to go to war. As a consequence, energy supplies are closely and continuously watched. The price of oil is announced on the news every day. And governments throughout the world have implemented rules and regulations to monitor and control energy trade and stocks. Since the first oil price crisis in 1973-74, awareness has increased dramatically, not only about the dependence of the world’s economy on the costs of energy, but also about the exhaustion of conventional energy forms. At the same time the Club of Rome warned about ‘Limits to Growth’, arguing that both the exhaustion of natural resources and the pollution consequences of resource use will eventually set constraints on growth of population and the economy (Meadows et al., 1972). Energy has more and more become a scarce resource, and hence it has increasingly attracted the attention of the economist (see also Chapters 73,74 and 75). 2. Energy and the environment Causes and consequences Several...
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