A Simulation Analysis of U.S. Energy Demand, Supply, and Prices.

by Kent P. Anderson

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Describes a dynamic simulation model of U.S. energy demand, supply, and price, and comments on the results obtained in initial test runs. The model is an analytical device for translating assumptions about market structure into market outcomes. It is capable of accommodating a wide variety of assumptions about parameter values, future technologies, projected economic and demographic growth, and foreign oil supply conditions. Short-run and long-run demand and supply mechanisms are treated explicitly. Supply relationships rely heavily on technical data concerning costs and resource endowments. Initial test runs show that, between 1973 and 1985, total energy use increases by a factor ranging from 32 to 46 percent, corresponding to average annual growth rates of 2.3 to 3.2 percent. Since the model incorporates a real GNP growth rate of nearly 3.9 percent, these values imply an annual rate of decline of 0.7 to 1.5 percent in the energy/GNP ratio. 92 pp. Ref.

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