Richard L. Gordon

The Hobbling of Coal: Policy and Regulatory Uncertainties

The inevitable by-product of societal concern over the side effects of coal production and use is greater than recognized difficulties to meet coal production goals. Thus, society faces the need to make trade-offs it is not adequately anticipating. The primary influences have come from air pollution regulation dealing with sulfur oxides; regulations in this realm were strengthened in 1977. Questions exist about the ability to meet these requirements and about whether tighter controls will be imposed on other pollutants. Problems also exist on the production side—labor unrest, stripmine reclamation requirements, and delays in leasing federally owned coal.

Reforming regulation of electric utilities in the USA Priorities for the 1980s

Abstract The electric utility industry in the USA has been forced to face its transition to an era of slower growth while dealing with an increasingly extensive, complex and rigid regulatory framework. Traditional ‘public utility’ regulation is ill-suited to a period of radical change. The addition of environmental regulations, more stringent controls on nuclear power, and in some states separate energy policy agencies has aggravated the task. This article explains this problem and calls for radical reform, preferably placing more reliance on market forces.

An Introduction to Market Failures

This chapter deals with the market failure complications neglected in the simplified model presented in chapter 2. An overview is given first, and then issues related to specific market failures are discussed. The discussion employs the proposition more fully developed in chapter 6 that the market failure argument neglects the difficulties of implementation. These problems are clear enough that they can be sensed before the full criticism is presented.

An evaluation of the competitiveness of the US coal market

Abstract This paper examines the competitiveness of the US coal industry. The methodological approach is based on a comparison of what actually occurred in 1979, 1980 and 1981 with what a cost-minimizing (transportation type) model for the same years would have predicted. The level of disaggregation in the model is consistent with that of the National Coal Model [4] which has 31 supply regions, 44 demand regions and 40 different coal types. The clear conclusion which emerges is that modelling the US coal industry in a cost-minimizing framework is valid.

The economics of coal supply—The state of the art

With the mounting interest in national energy problems has come intensification of efforts to determine the future economic availability of fuels. Until well into the 1970s, work concentrated on estimation of oil and gas supplies. However, subsequently numerous evaluations of coal supply have emerged. Such studies share with earlier work on oil and gas dependence upon an inadequate statistical base. Energy has been one of many areas in which governmental data gathering has badly lagged behind national information requirements.‡ Nevertheless, the fragmentary work that has been possible suggests that the availability of low cost coal resources may be greatly exaggerated.§ In the present article, this work on coal is reviewed.

Mythology and reality in energy policy

Abstract Explanations of world energy problems differ widely. At one extreme, it is alleged that the difficulties arise from impending exhaustion of mineral resources. Others contend that the difficulties are man-made though they disagree over the men responsible - whether they are in companies, governments of consuming countries or those of producing countries. The premise of Professor Gordons article is that the difficulties arise from government policies in both consuming and producing countries. This is developed by showing some of the defects of alternative arguments and by stressing the importance of systematic economic analysis to rational evaluation of public policy.

Timidity in electric utility deregulation

Abstract Reform proposals for electric power have centered around facilitating private provision of electricity. While such private provision may be desirable, its facilitation is inadequate to deal with the defects of electric power regulation. A number of economists have complained about the inherent defects of regulation. A range of suggestions has appeared. The alternatives include total deregulation, separating generation from transmission and distribution and deregulating generation, allowing competition in distribution, and reforming the existing regulatory process. Merely aiding power purchase is inadequate reform from any of the broader perspectives. Regulation has involved increased controls that have aggravated problems of maintaining profitability in a more uncertain market environment. Utility response has been to lessen greatly its commitments to continued expansion.

The rise and fall of oil generation in the USA: A study in institutional adaptability

Abstract After 1978, the US electric power industry more than halved oil generation of electricity. This reversed a rising trend that had accelerated with the liberalization of residual fuel oil import quotas in 1966. This paper uses detailed data on inter- utility sales filed with the US government and limited circulation statistical reports from electric utilities to appraise the changes. The changes reflect the capacity of a flexible, growing, integrated electric utility system to adapt to changing circumstances. Much of the reduction in oil use was effected by purchases of coal-generated electricity by oil-based companies on the east coast. Another major development was the introduction of new coal-fired plants to the west- south-central states. This allowed coal to take over from oil as the alternative to increasingly more expensive natural gas. In New York and California, however, gas became available to displace oil. A further more modest contribution was made by having plants that had shifted from coal to oil resume coal use.

Electricity Restructuring in Practice

Severe flaws exist in the theoretic case for regulation and practice in electric power is worse than theory predicts. Theory suggests regulation was both unneeded and unlikely to succeed. New Deal initiatives in electric power were defective; energy interventions in the 1970s were totally unjustified. Crises arose because restructuring was implemented in disregard of these lessons. In self-defense, electric utilities are merging.

Optimum Economic Organization: The Efficiency of Firms and Its Implications for Public Policy

This chapter shows how the private sector responds to complexity. First, firms and industries select the organizational structure most conducive to efficiency. Similarly, the most efficient of the available methods of transacting are employed. The textbook auction market is often replaced by direct dealing with customers. Better methods of financing are sought. Contracts are used to stabilize relations. When a product cannot be satisfactorily secured from outsiders, the firm may decide to integrate vertically.