1. NS4960 Spring Term 2018 Burnell and Simon Chapter 3 U. S
NS4960 Spring Term 2018 Burnell and Simon Chapter 3 U.S. Energy Security Policy Private Property Rights and the Public Good

2. Outline Core issues of energy security
Public policy considerations
Free market incentives
Idea of comprehensive energy security
Domestic goals
International repercussions

3. Overview I
Core issues energy security somewhere near borderline between
Pure public policy considerations and
Marketplace of free enterprise entrepreneurial activity
Comprehensive energy security policy means
Significant attention be paid to current and future international relations and
Existing and developing global market forces alike
A domestically focused position one nation’s “energy security” can lead to insecurity in other nations

4. Overview II
Examples
Japan’s decision to develop nuclear power an example eventually led to many country’s rejecting nuclear power
U.S. has driven up global food prices as adoption of ethanol additive policies led to increased demand for corn feedstocks
Philosophy of governance plays a significant role in determining whether energy security is primarily driven by
Public policy
Market driven choice or
Some combination of both

5. Main Points I
Government and markets tend to view energy security issues quite differently
Government’s generally view energy security from perspective of property rights
Regulating those rights in ways that reduced marginal social costs and
Ways that advance existing policy priorities
Marginal social costs are the basis of regulating property and its use.
The effort to manage marginal social costs through constraints on property rights has a long term impact on energy security

6. Main Points II From a market perspective,
Energy type
The uses made of the energy and
The development decision regarding resource recovery
Are based on a combination of
Market demand
The ability of firms to minimize costs and
Profitability
Costs are managed either through government policy or through the market mechanism.

7. Main Points III
In some cases such as electricity generation and transmission government regulation of electricity markets serves as a basis of promoting energy security
Big lesson for energy security is that it is a function of the allocation of property rights within our legal institutional framework
Property rights and the exercise of such rights key components in long term market developments in
Energy supply
Affordability and
Long term security

8. Main Points IV
In case of nations with large national energy agencies managing key energy resources the capacity to create a more uniform articulation of property rights and rules governing property use may lead to greater capacity to produce energy security
Conversely large scale government control as the potential to reduce entry points of energy innovation – PEMEX in Mexico
Contrast energy revolution in the U.S.
Market driven innovation often works in this highly dramatic way