R-3 Repository :: Browsing by Author "Hartley, Peter R."

Browsing by Author "Hartley, Peter R."

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A Global Model of Natural Gas Markets: Some Case Results
(2004) Hartley, Peter R.; Medlock, Kenneth B. III; Nesbitt, Jill; James A. Baker III Institute for Public Policy
A Model of the Operation and Development of a National Oil Company
(James A. Baker III Institute for Public Policy, 2007) Hartley, Peter R.; Medlock, Kenneth B. III; James A. Baker III Institute for Public Policy
A portfolio approach for the TESOBONO problem in Mexico during 1994: A simple model
(1997) Gonzalez-Lugo Lopez, Jesus; Hartley, Peter R.
During 1994 domestic and foreign investors in Mexico increased the share of TESOBONOS in their portfolios when they perceived the possibility of a future devaluation of the Mexican peso or, in other words, the abandonment of the controlled floating exchange rate regime. This work finds that both domestic and foreign investors responded to monetary policies followed by Banco de Mexico after March 1994, when adverse political events occurred, keeping their investment in Mexico in TESOBONOS rather than leaving the country. Domestic and foreign investors did not have a high expected probability of devaluation, however, they were certain that if a devaluation was going to happen the size of it would be approximately a hundred percent.
Access price determination in a vertically integrated industry
(1998) Negrin-Munoz, Jose Luis; Hartley, Peter R.
We propose an access price determination approach, where the only regulatory instrument is the interconnection charge. Retail prices are set by unconstrained profit maximizing firms. We present a two stage model, solved backwards. In the second stage, the two firms compete freely, taking the access price as given. In the first stage, the regulator uses the information generated in the second stage to set the social welfare maximizing access price. We first assume a certainty model where firms have constant marginal costs. Firms may have different costs at the retail level and may choose either prices or quantities of the retail service. We find that the regulator generally provides the entrant with a subsidy (paid by the incumbent) in the form of an access price that does not cover marginal costs. A virtual (real) subsidy is provided when the incumbent has lower (higher) retail costs than the entrant. We then assume that the firms may not have constant marginal costs and that the regulated firm holds private information about its type. We determine an access pricing rule in which any excess of the incumbent's price over its marginal costs lowers the optimal access price. Finally, we use simulation models to compare our partially regulated model with a fully regulated model in which the regulator sets the interconnection and the retail prices. We find that when the integrated firm holds all the private information, the partially regulated model achieves a lower expected social welfare. Nevertheless, when the regulator and the regulated firm do not know the entrant's type, the partially regulated model can achieve a higher level of welfare. We also find that under uncertainty, the partially regulated model often results in the offering of one single contract regardless of the announced type of the incumbent.
Accommodating Renewable Generation Sources on the Grid
(James A. Baker III Institute for Public Policy, 2019) Hartley, Peter R.; James A. Baker III Institute for Public Policy
Aggregate Economic Implications of New Technologies in Energy Industry
(2013-09-16) Zhang, Xinya; Hartley, Peter R.; Medlock, Kenneth B., III; Loch-Temzelides, Ted; Embree, Mark
This thesis studies technological progress in the energy sector and the transition path from fossil fuels to renewable energy, with a particular emphasis on the conse- quences to the whole economy. Currently, there is an active discussion regarding sub- sidizing renewable energy sources, which are often portrayed as the sole future source of energy and the driver of signi cant employment and economic growth. However, innovation in the fossil fuel sector and its continuing development can also be a game changer and should not be ignored. In the rst chapter, we use a dynamic general equilibrium model with endogenous technological progress in energy production to study the optimal transition from fossil fuels to renewable energy in a neoclassical growth economy. We emphasize the importance of modeling technology innovation in the fossil fuel sector, as well as in the renewable energy industry. Advancements in the development of shale oil and gas increase the supply of fossil fuel. This implies that the \parity cost target" for renewables is a moving one. We believe that this important observation is often neglected in policy discussions. Our quantitative analysis nds that these advancements allow fossil fuels to remain competitive for a longer period of time. While technological breakthroughs in the fossil fuel sector have postponed the full transition to renewable energy, they have also created many jobs and stimulated local economies. In the third chapter, we use an econometric analysis to compare job creation in the shale gas and oil sectors with that in the wind power sector in Texas. The results show that shale development and well drilling activities have brought strong employment and wage growth to Texas, while the impact of wind industry development on employment and wages statewide has been either not statistically signi cant or quite small. The rst and third chapters question the current enthusiasm in policy circles for only focusing on alternative energy. Chapter 2 provides some theoretical support for subsidizing renewable energy development. Here we develop a decentralized ver- sion of the model in Chapter 1 and allow for technological externalities. We analyze the e ciency of the competitive equilibrium solution and discuss in particular dif- ferent scenarios whereby externalities can result in an ine cient outcome. We show that the decentralized economy with externalities leads to under-investment in R&D, lower investment and consumption, and delayed transition to the renewable economy. This may provide an opportunity for government action to improve private sector outcomes.
Asian Spot Prices for LNG and Other Energy Commodities
(2015) Alim, Abdullahi; Hartley, Peter R.; Lan, Yihui; James A. Baker III Institute for Public Policy
We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, the price of Brent oil, and spot prices of fuel oil and thermal coal imported into Japan, South Korea, China, and Taiwan. We are especially interested in understanding the behavior of the JKM price and how it may reflect competition between fuels in Asia. The increasing proportion of spot and short-term trading of LNG, together with proposals to develop an LNG pricing hub in Asia with associated derivatives markets, have increased the interest in understanding how the JKM price behaves. It is also widely anticipated that imminent LNG exports from the US Gulf Coast to Asia and Europe will substantially disrupt historical pricing relationships between natural gas prices in different locations and the relationships between those prices and the price of oil. It therefore is of interest to characterize the behavior of LNG prices in Asia before these disruptions occur. Finally, our analysis has implications for the suitability of the JKM price as an alternative to oil or other spot natural gas prices for indexing long-term LNG contracts.
Borrowing constraints and the Survey of Consumer Finances: A critical examination
(1999) Rabiela-Pineda, Guillermo; Hartley, Peter R.
Recent studies contend that answers to questions in the Survey of Consumer Finances reveal whether or not households are credit constrained. In these studies, households are defined as constrained if they applied for credit unsuccessfully or were discouraged from applying by the prospect of refusal. Households that applied successfully are classified as unconstrained. This approach is problematic in that it presumes that households do not take into account the presence and extent of credit constraints when formulating their loan demands. Credit constraints could have a more pervasive effect than precluding households from applying successfully. Anticipation of such constraints can also affect the amount of credit that households request. Successful applicants, therefore, need not attain the level of consumption that would be optimal in the absence of encountering a current borrowing constraint. Furthermore, unsuccessful applicants for loans comprise only a fraction of constrained households, namely those that overestimated the size of the loans likely to be granted. This dissertation uses a simple model of intertemporal optimization to demonstrate the effects of borrowing constraints on the demand for credit. It estimates a model of total debt of the households that applied for credit successfully. A key finding is that the demand for debt by particular groups that are likely to be constrained depends positively on current income. This is consistent with the presence of binding constraints among households that previous studies classified as unconstrained. Furthermore, this dissertation estimates a probit model of the outcome of the credit application. The results are interpreted in light of the hypothesis that unsuccessful loan applications primarily represent a forecasting error by households. This allows one to explain the lack of significance or apparent inconsistency of the coefficient estimates of certain variables.
Carrots and sticks: Enforceable effort and the minimum wage
(1999) Sadka, Richard Albert; Hartley, Peter R.
Rent controls lead not only to a smaller market quantity of rental housing; they also result in a deterioration in the quality of available rental housing. A model of the labor market is presented in which the same kind of adjustment can take place when a minimum wage is imposed. The quality of a job is represented by the effort level which workers expend on the job. We assume that firms can observe and control this level of effort. This assumption may be particularly true of the lower paying jobs which would be most affected by the imposition of a minimum wage. Although effort can be controlled, there are limits to how much effort the firm would enforce. To begin with, enforcing effort is costly. In addition, workers have the option of working elsewhere or engaging in non-market activity. We examine the Pareto optimum and short-run perfectly competitive versions of this problem. The two coincide when the on-the-job utility takes a form which eliminates income effects. When a minimum wage is imposed, the short-run perfectly competitive system is no longer Pareto optimal, even in the "second best" sense. For commonly used functional forms, we find that required effort increases enough to make utility on the job decline when a minimum wage is imposed. This contradicts the classical notion that the workers who keep their jobs under a minimum wage are better off. The overall welfare generated by the system also declines. This type of adjustment in the quality of jobs is not accounted for in the standard analysis. When the adverse effects of a minimum wage are measured only in terms of lost employment, therefore, they may be underestimated.
Climate Policy and Energy Security: Two Sides of the Same Coin?
(James A. Baker III Institute for Public Policy, 2008) Hartley, Peter R.; Medlock, Kenneth B. III; James A. Baker III Institute for Public Policy
Electricity Demand and Supply in Mexico
(James A. Baker III Institute for Public Policy, 2002) Hartley, Peter R.; Martinez-Chombo, Eduardo; James A. Baker III Institute for Public Policy
Electricity Reform and Retail Pricing in Texas
(James A. Baker III Institute for Public Policy, 2017) Hartley, Peter R.; Medlock, Kenneth B. III; Jankovska, Olivera; James A. Baker III Institute for Public Policy
Electricity market reforms have pursued two main goals, both aimed at increasing economic efficiency. The first is to make prices more reflective of costs so that consumers can make more efficient decisions about where and when to consume electricity. The second goal is to ensure that suppliers minimize the costs of supply. How successful has electricity market reform in Texas been with regard to achieving these goals? We focus on one aspect of this overall set of desired outcomes, namely whether movements in retail prices reflect wholesale market prices and whether reform has delivered cost reductions in the delivery of energy services by retailers. We find clear evidence that retail prices in competitive market areas better reflect wholesale prices and have moved favorably for consumers relative to wholesale prices. The same is not necessarily true for consumers in non-competitive market areas. This suggests that competitive retail markets have delivered cost reductions consistent with electricity service providers reducing their marginal costs. The effort that Texas undertook over a decade ago to introduce competition into the retail electricity supply thus appears to be yielding the benefits to consumers that were intended in competitive areas. Consumers in less competitive areas do not appear to have benefited as much.
Electricity Sector Demand for Natural Gas in the United States
(2007) Hartley, Peter R.; Medlock, Kenneth B. III; Rosthal, Jennifer; James A. Baker III Institute for Public Policy
Employment Impacts of Upstream Oil and Gas Investment in the United States
(2017) Agerton, Mark; Hartley, Peter R.; Medlock, Kenneth B. III; Loch-Temzelides, Ted P.; James A. Baker III Institute for Public Policy
Employment Impacts of Upstream Oil and Gas Investment in the United States
(James A. Baker III Institute for Public Policy, 2014) Agerton, Mark; Hartley, Peter R.; Medlock, Kenneth B. III; Loch-Temzelides, Ted P.; James A. Baker III Institute for Public Policy
Technological progress in the exploration and production of oil and gas during the 2000s has led to a boom in upstream investment and has increased the domestic supply of fossil fuels. It is unknown, however, how many jobs this boom has created. We use time-series methods at the national level and dynamic panel methods at the state level to understand how the increase in exploration and production activity has impacted employment. We find robust statistical support for the hypothesis that changes in drilling for oil and gas as captured by rig counts do, in fact, have an economically meaningful and positive impact on employment. The strongest impact is contemporaneous, though months later in the year also experience statistically and economically meaningful growth. Once dynamic effects are accounted for, we estimate that an additional rig count results in the creation of 37 jobs immediately and 224 jobs in the long run, though our robustness checks suggest that these multipliers could be bigger.
Energy Market Consequences of Emerging Renewable Energy and Carbon Dioxide Abatement Policies in the United States
(James A. Baker III Institute for Public Policy, 2010) Hartley, Peter R.; Medlock, Kenneth B. III; James A. Baker III Institute for Public Policy
Energy Security in a Context of Hyper-Social Mobilization: Insights from Bolivia
(2008) Mares, David R.; Hartley, Peter R.; Medlock, Kenneth B. III; James A. Baker III Institute for Public Policy
ERCOT Froze in February 2021. What Happened? Why Did It Happen? Can It Happen Again?
(James A. Baker III Institute for Public Policy, 2022) Hartley, Peter R.; Medlock, Kenneth B. III; Hung, Shih Yu (Elsie); James A. Baker III Institute for Public Policy
A step-by-step examination of various factors that were blamed for the extended power outage on the ERCOT electricity grid in February 2021 reveals that no single factor fully explains the calamity. All forms of generation capacity experienced failures, but bureaucratic failure in identifying and addressing risks along fuel supply chains was a major failure. Moreover, most proposed remedies do not fundamentally address what occurred. Some may be driven by opportunistic lobbying. We make several recommendations, some of which are already being implemented.
Essays in Efficiency Analysis
(2013-09-16) Demchuk, Pavlo; Sickles, Robin C.; Hartley, Peter R.; Scott, David W.
Today a standard procedure to analyze the impact of environmental factors on productive efficiency of a decision making unit is to use a two stage approach, where first one estimates the efficiency and then uses regression techniques to explain the variation of efficiency between different units. It is argued that the abovementioned method may produce doubtful results which may distort the truth data represents. In order to introduce economic intuition and to mitigate the problem of omitted variables we introduce the matching procedure which is to be used before the efficiency analysis. We believe that by having comparable decision making units we implicitly control for the environmental factors at the same time cleaning the sample of outliers. The main goal of the first part of the thesis is to compare a procedure including matching prior to efficiency analysis with straightforward two stage procedure without matching as well as an alternative of conditional efficiency frontier. We conduct our study using a Monte Carlo study with different model specifications and despite the reduced sample which may create some complications in the computational stage we strongly agree with a notion of economic meaningfulness of the newly obtained results. We also compare the results obtained by the new method with ones previously produced by Demchuk and Zelenyuk (2009) who compare efficiencies of Ukrainian regions and find some differences between the two approaches. Second part deals with an empirical study of electricity generating power plants before and after market reform in Texas. We compare private, public and municipal power generators using the method introduced in part one. We find that municipal power plants operate mostly inefficiently, while private and public are very close in their production patterns. The new method allows us to compare decision making units from different groups, which may have different objective schemes and productive incentives. Despite the fact that at a certain point after the reform private generators opted not to provide their data to the regulator we were able to construct tree different data samples comprising two and three groups of generators and analyze their production/efficiency patterns. In the third chapter we propose a semiparametric approach with shape constrains which is consistent with monotonicity and concavity constraints. Penalized splines are used to maintain the shape constrained via nonlinear transformations of spline basis expansions. The large sample properties, an effective algorithm and method of smoothing parameter selection are presented in the paper. Monte Carlo simulations and empirical examples demonstrate the finite sample performance and the usefulness of the proposed method.
Essays in energy and environmental economics
(2004) Hendrix, Michele Elizabeth; Hartley, Peter R.; Soligo, Ronald
Chapter One utilizes a hedonic pricing model with a Box-Cox functional form to discern the importance of air quality in the housing prices of various neighborhoods in Houston, Texas. The sample of over 4000 homes employed in the model includes not only detailed physical characteristics of the various properties, but also less tangible values of ozone level, crime, education, and others, which differ according to neighborhood. Chapter Two presents the results of a survey of Houston homeowners regarding ozone levels around the city. The responses are tested, and then corrected, for statistical coherence. In Chapter Three, the subjective survey data is used in the objective (hedonic) pricing model developed in Chapter One. The compelling issue is how the perceptions of homebuyers compare to observed ozone levels in the hedonic model, and which measure offers a better fit with the housing price data. Using 2-digit United States input-output accounts, Chapter Four features calculation and detailed algebraic decomposition of the U.S. energy intensities of production from 1987 to 1997. More specifically, the chapter seeks to determine whether technology improvement or change in segments of final demand contribute most to the decline in energy intensity over the period.

Browsing by Author "Hartley, Peter R."

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