Raymond Li

International Natural Gas market Integration

We explore the relationships among the North American, European and Asian natural gas markets for evidence of convergence and integration for the January 1997 through May 2011 period. The analyses are conducted under a multivariate framework, so the dynamics among the prices can be captured without the necessity of identifying an anchor price series. We find evidence of convergence among the Japanese, Korean, Taiwanese and UK prices. The North American price displays behaviour that is distinct from this group of prices. We conclude that there is not a fully integrated international natural gas market. The integration between European (represented by NBP) and Asian geographic regions appears to be due primarily to underlying contractual mechanisms specifically linking natural gas prices to oil prices rather than the result of market supply and demand interactions. We also find that the relationship among the Asian markets has evolved with Japanese prices adjusting to changes in South Korean and Taiwanese prices.

Transitions in China's Oil Economy, 1990-2010

A team of specialists on Chinas energy sector reviews a series of major transitions that have transformed that countrys oil economy over the past two decades. These include, on the demand side, (a) the increasing role of oil in the economy as a whole vis-à-vis other major energy carriers (as incomes have risen and millions of households have purchased vehicles and have also traveled by air), and (b) an increasing emphasis on energy efficiency and carbon mitigation. On the supply side, several additional transitions are discussed, namely (1) the scaling up of output from the central and western regions as well as from offshore, as the major northeastern oil fields decline after several decades of very heavy production, (2) a shift from being a major oil exporter to the worlds second-largest oil importer, (3) expansion and diversification in the number of sources from which China imports oil, (4) changes in the way imported oil enters the country (increasingly via pipelines from neighboring countries), and (5) with such heavy dependence on imports, the building of strategic petroleum reserves and an immensely enlarged refining capacity, intended to enhance the nations oil security.

The evolution of the international steam coal market

Purpose – The objective of this paper is to analyse the evolution of international steam coal trade, the nature of coal trade contracts and the pricing mechanism in the two main coal trading regions – the Atlantic and the Asia‐Pacific, from the early 1980s to recent years. The historical developments and future directions of the market are discussed.Design/methodology/approach – The past developments of the international steam coal market is first reviewed and then compared to the four stages in the development of the international crude oil market in terms of trade and pricing, as identified in Roeber.Findings – The four stages in the development of a mature spot market are: appearance of the need for short‐term physical balancing, availability of price reporting and transparency, price feedback from short‐term prices to long‐term prices and emergence of risk management instruments. It is found that the international steam coal market has already gone through the first three stages and is progressing in ...

Energy Futures Prices and the US Dollar Exchange Rate

This paper evaluates the relationship among the NYMEX futures prices for crude oil, unleaded gasoline, heating oil and the US trade‐weighted exchange rate. The motivation is to update and extend the literature in an attempt to determine the relationship between the US exchange rate and energy prices. In addition, the causal relationships among the energy futures prices are examined. Cointegration is detected among the variables, but contrary to the existing empirical literature, it is found that the US exchange rate can be excluded from the cointegrating space. The Granger causality tests and impulse response functions also indicate that the US exchange rate is not related to the energy prices. The recursive cointegration analysis reveals that the relationship between the US exchange rate and the energy futures prices has faded across time.

China’s New Energy Security: A Swing of the Pendulum

Purpose The aim of this paper is to understand and investigate the context of energy security in China.

Econometric Analysis of Monthly Peak-Hour and Total Usage Patterns of Hong Kong’s Cross-Harbor Tunnels

As one of the most densely populated metropolises in the world, Hong Kong daily sees severe traffic delays at the Cross-Harbour Tunnel (CHT), though not at the Eastern Harbour Crossing (EHC) or the Western Harbour Crossing (WHC). In 2013, the Hong Kong Special Administrative Region (HKSAR) Government proposed raising the tolls of the publicly owned CHT and lowering those of the publicly owned EHC for nine vehicle types: private cars, motorcycles, taxis, three kinds of buses, and three kinds of goods vehicles. The privately owned WHC’s already high tolls, however, would remain unchanged. Using monthly usage and peak-hour usage data for January 2003 through June 2015, a Generalized Leontief demand system was estimated and found that private cars, motorcycles, and goods vehicles have price-sensitive tunnel usage patterns that are also time-dependent. The usage patterns of taxis and buses, which are public transportation vehicles, are totally price-insensitive. These findings suggest that the HKSAR Government’s proposed toll changes would reduce the CHT’s monthly usage by 7.4%–12.2%, and peak-hour usage by 5.0–16.8%. These usage reduction estimates suggest that a time-of-use (TOU) toll design can better manage CHT congestion than the current non-TOU design.

Income and Energy Consumption in Asia A Panel Cointegration Analysis with Common Factors

The research presented in this paper studies the relationship between energy consumption and income for a panel of Asian economies. The Asian economies represent a dynamic, diverse, and interesting set of countries on which to base an examination of these relationships and the tendencies for these economies to be on a path of convergence and integration in their energy consumption and use characteristics. We start with an overview of the evolution of energy intensities for the individual countries in our study. Panel data methodologies are then employed to gain the advantage of increased explanatory power of the econometric analysis results from pooling time series and cross-section observations. In addition, our panel cointegration analyses incorporate common factors as a means of accounting for variables beyond the bivariate relationship between income and total final energy consumption. The results find support for the flow of causality running from income to energy consumption, albeit with feedback. The results are consistent with and supportive of the findings of the seminal paper by Kraft and Kraft (1978). In addition, the long-run income elasticity estimates for the panel find that the estimates are very sensitive to the inclusion or exclusion of common factors.