Economics of Oil, Gas and Energy

Economics of Oil, Gas and Energy

Week 8:Assignment

Final Project

This week your Hand-in Assignment is your Final Project.

The Final Project should not exceed 3,000 words plus bibliography and attachments. The evaluation and grade of your outline will be based on the following criteria:

• The difficulty of the topic chosen;
• Explicit inclusion of one or more elements of this module;
• Evidence that you understand key module concepts;
• Quantitative depth;
• Correct format and style;
• Quality of sources;
• Synthesis of diverse concepts introduced in this module;
• Quality and maturity of thought and depth of your argument and analysis;

• Credibility and elegance of your argument;
• Responsiveness to your professor’s comments;
• Style and grammar.

Please make sure that you cite and reference all your outside sources properly, as per the Harvard Referencing System.

Economics of Oil, Gas and Energy

Week 4: Assignment

Individual Project

This week you will be submitting your Proposal for the course project. This is described below:

Introduction to the case study

The integrated project is designed to tie your newly acquired knowledge of energy economics to the analysis of major global issues you will likely face in your career. What must be explicit in your project is a demonstration of your ability to use your understanding of energy economics to create a cogent and economically sound synthesis of concepts and ideas to produce a convincing evaluation of one or more of these major issues.

In this project, you will assume a role and describe how you will execute this role. There is significant latitude in the role you choose to assume, but your role must in some manner address one or more of the following issues:

• The prospect of oil and gas production declining while energy needs continue to grow;
• The increasingly urgent need to reduce global carbon emissions;
• The political difficulties faced by all countries in restraining emissions if it means reduced economic welfare for their people;
• The possibility of increasing control of OPEC, and in particular Persian Gulf countries, over oil prices and oil supply;
• The possibility of significant oil shocks/interruptions due to war or political design;
• Political difficulties associated with different parties’ claims to oil production rights and the consequences for negotiating production agreements;
• The increasing need for R&D to create new, economic supplies of energy;
• The relative roles of private industry versus governments in assuring efficiency/fairness in the global energy market.

Structure

Your project can be a case analysis of an actual decision faced by an energy company. Alternately, the project may be a research project that states a hypothesis, provides evidence, and draws conclusions.

In all cases you will assume a role and describe your decision-making process. You are free to choose your role, and creativity is encouraged; the following are suggestions:

• You are the senior vice president (SVP) of refining for a major international oil company. You are charged with developing the company’s refining investment strategy for the next decade. You must consider the uncertainty in the “shape” of the demand barrel owing to new sources of transportation fuels that may arise and the global need (or not) for new refining capacity.
• You are the “energy efficiency guru” of a large country and you must develop a recommendation for the team negotiating an international climate change agreement regarding how much can be promised by way of carbon emissions reductions due to the implementation of energy efficiency measures country-wide over the next 15 years.
• You live in a country that is rich in oil but whose political system has been fraught with regional partisanship. You have been recently appointed to a key role in a commission that will recommend a new constitutional arrangement for defining oil ownership rights and a new design for a management structure that maximises social welfare for the country and ensures social fairness.
• You are the regional VP of a mid-size oil company. Your company has just discovered what may be a major new field (the reserves are highly uncertain). Your job is to recommend an exploration programme that maximises shareholder value while minimising risk. You must consider the uncertainties associated with the size of the reserves, future oil price, cost of development, and the risk that some exploration wells needed to define the reserves will be dry holes.
• You are the director of an international governmental organisation charged with planning for the possibility of a major oil supply interruption. You must develop a recommendation for approval by member countries that details the actions that must be taken to prepare for such an interruption and actions to coordinate a response in the event it occurs.
• You are the supply manager for an international oil company, responsible for acquiring crude and products for distribution. Your company has refining capacity, and some crude supply. But the crude supply is not sufficient to supply your own refining system. Further, your refining capacity is not sufficient enough to supply all the product needed for your gasoline, diesel and jet fuel customers. Describe the process you will go through to deliver next month’s supply in the most economic way possible.
• You are the “King/Queen of the World.” You have assembled the leaders of all countries to present their arguments regarding their rights/obligations/entitlement related to reducing their country’s carbon emissions. You have the authority to require specific commitments from each country and to enforce them. You are focused on the next 20 years. The commitments can involve quantitative emissions limitations and you can require the transfer of funds from one country to the other. You must decide both the overall level of emissions to be met over the next 20-year horizon and the specific commitments from each country. Your goal is to be fair in allocating the economic burden. You must also decide the appropriate roles for private industry versus government.
• You are in charge of allocating all funding for energy R&D for your country, a large user of fossil fuels (could be China, India, the EU, USA, etc.) You must decide how to allocate these funds to maximise the economic benefit to your country while maximising the likelihood of meeting aggressive carbon emissions targets.
• You are the public relations officer of a large nuclear power consortium. Your job is to argue the benefits of nuclear power. Prepare a keynote address to a world energy congress, with slides that support your arguments in favor of increased emphasis on nuclear as an energy source. Include responses to possible objections to your position.
• You are an advisor to OPEC. You have been asked to prepare an analysis of future demand for OPEC oil, including the range of uncertainty.
• You are an advisor to the petroleum minister of Saudi Arabia. You have been asked to prepare a recommendation on whether or not to significantly expand Saudi oil production capacity.
• You are a skeptic. You do not believe in the Hubbert “peak oil” model, rather believing that there are vast as-yet undiscovered oil deposits that await only the advent of new technology to find and produce them and sufficiently high oil prices. Neither do you believe in the alarm raised by those who think significant climate change is around the corner unless remedies are quickly enacted. You think any evidence of recent warming is the product of random changes in global temperature that have occurred for countless eons. You do not believe any part of this is anthropogenic—produced by human activity. State the best case you can make for your position. Now reverse roles and develop a rebuttal to this case. Conclude with your actual personal assessment of the reality, or not, of both “peak oil” and anthropogenic climate change.

Further guidance and direction

Depending on the role you have assumed, your target audience will differ. Develop a clear picture of this audience before launching out. The steps to follow are below:

1. Identify your audience (even if you have chosen something like the “King/Queen of the World,” role, you will have to explain your decisions to keep your “subjects” happy);
2. Develop a preliminary set of arguments you will present (these can change as you discover more);
3. Anticipate the counter-arguments you can expect to encounter; make a list;
4. Determine the degree to which your arguments will likely involve quantitative analysis; assure yourself you can handle this;
5. Determine the sources you will need; make a list;
6. Write your proposal with your audience in mind.

 

Assignment detail

A two page typed Proposal (1,000-word maximum) of your Final Project (week 8) must be turned in to your Instructor. This proposal will include the following and follow the Harvard Referencing System.

• A summary of your project—case study or a research paper—and the course topic(s) your project will address;
• A statement of the role you are hypothetically assuming;
• A statement of sources you will use and cite;
• A brief description of arguments you expect to be presenting (note that these can, and arguably even should, change in your final submission; you are not “locked in” to the arguments you present at this stage of your project);
• A statement of the quantitative methods that will be used to highlight your findings.

The evaluation and grade of your outline will be based on the following criteria:

The Final Project should not exceed 3,000 words plus bibliography and attachments. The evaluation and grade of your outline will be based on the following criteria:

• The difficulty of the topic chosen;
• Explicit inclusion of one or more elements of this module;
• Evidence that you understand key module concepts;
• Quantitative depth;
• Correct format and style;
• Quality of sources;
• Synthesis of diverse concepts introduced in this module;
• Quality and maturity of thought and depth of your argument and analysis;

• Credibility and elegance of your argument;
• Responsiveness to your professor’s comments;
• Style and grammar.

During the Outline phase (Week 4), the critical result how you have organised the structure of your project and how you refine this based on feedback from your Instructor.

Please make sure that you cite and reference all your outside sources properly, as per the Harvard Referencing System.

Use the Turnitin link below to submit your assignment.

 

Concern of the global environment is the prominent issue of the present world because we face a lot of environmental problems like global warming, ozone depletion, deforestation, etc.  The severity and magnitudes of global issues increases day by day and unless we do something serious to reverse the global environmental problems human very survival is under threat.  Due to growing awareness among the global human communities and global societies regarding the environmental crisis, these environmental problems are given top priorities in the discussion that take place in national and international level. Topics for discussion include various environmental problems such as global warming, stratospheric ozone depletion, acid rain, and depletion of natural nonrenewable and renewable resources, deforestation and other biodiversity issues. The issues mentioned above are threatening the global ecosystem in different and varied magnitude and results of some which we have started experiencing and some we are going to experience. The effects of these environmental problems on the global ecosystem necessitate global cooperation to prevent and reverse the global environmental problems such as environmental pollution, depletion of natural resources, extinction on some species, ozone depletion, and acid rains (Rothman H. 1972). A coordinated action and measures at a global level that seek to reverse the trend and promote efficiency in the use of natural resources will result in objectives sustainable development are attained.  The term sustainable development means development that meets the needs of present generation without compromising the needs of future generation. (Barbier and Edward. 2012).

Increasing the surface temperature of earth is one of the serious threats the global economy is facing.  Issue of rising surface temperature of earth or otherwise called global warming should be treated separately and must be considered on a different perspective because of the intensity of its consequences.  The effect of global warming, or ‘greenhouse effect, as it is popularly called, are long term and largely irreversible. Carbon dioxide, methane, CFCs and nitrous oxide act like a greenhouse, warming the earth’s surface. Hence the term “greenhouse effect”. In a greenhouse the enclosing glass panels allows the passage of incoming sun light, but traps a portion of the reflected infrared radiation, which warm the interior of the greenhouse. The greenhouse gases like carbon dioxide, methane, CFCs and nitrous oxide play a similar role, keeping the earth warm and making it habitable (Enger D. 2008). In the absence of such greenhouse gases, the earth surface would be 30⁰C cooler than it is today, making human life impossible. Consequences of global climate change resulted from global warming issues are severe and largely irreversible. It is estimated that if the concentration of green house increase the surface temperature of the earth would increase by as much as 1.5 -4.5 centigrade Celsius. But this may seem negligible but if the temperature grows at this rate human and animal inhabitation will become difficult.

Increase in surface temperature of earth will bring rise in the sea level and some part of the world will be submerged in water because of melting of polar and glacier ice. The first negative impact of global warming will be felt by coastal wetlands and low lying island nations in the form of increased and continuous floods (Purdom, Walton P. and Stanley M. 1983). Various studies undertaken world over suggests that one by fifth of Bangladesh could be under water by the year 2050.  Studies also suggest that increase in the sea level will make many people homeless.  The worst impact of global environment issues will be on agriculture and horticulture. Global warming will reduce soil moisture and reduce the agricultural productivity. Global warming reduces the rainfall and that will negatively impact various crops that depend on rainfall.  Altered rainfall is the most unpredictable and deleterious effect of greenhouse related climate change on agriculture. Since with higher global temperature more water will be evaporated from the oceans, average rain fall worldwide is bound to increase (Enger D. 2008). More rapid the climate change is, more severe will be the pressure towards extinction and more serious will be assault on ecosystem.

Role

I will take the role of an environmental expert who suggest various ways to control and reduce environmental issues.

I suggest various ways a human can reverse the trend of environmental degradation. This suggestion includes the following:

• Three specific actions that humans can take to minimize our impact on the ecosystem and ensure the survival human and other creatures:
• Reduce cutting down of trees. Reduce the activities that contribute to the pollution of air, water and soil and by protecting from pollutants and contaminates.
• Avoid using pesticides if at all possible.
• Plant trees and shrubbery in order to help replace those being cut down.

Brief description of arguments:

The consequence of global warming indicates that both developed and developing nations have good reason to worry about global warming. Cooperation at global level is the need of the hour to address the global environmental problems. Reposes to the global environmental issues can be analyzed as technical response and policy response.

Responses that attempts to reduce greenhouse gas emission and improving the carbon absorbing capacity of the earth is called technical response.

The following call for reducing greenhouse gas emission

1. Improving the efficiency of energy use.
2. Use of low or no carbon fuels.
3. Use of alternative to CFC in air conditioners and refrigerators.

A multi-pronged approach, bringing country’s emission standards in line with those of other developed countries, would have multiple benefits. First of all, it would force companies to produce cleaner engines. Second, government of various countries could signal its seriousness by imposing higher taxes on coal and diesel while offering incentive for CNG, hybrid and electrical car. Third, it could order a halt to chaotic urbanization and create a public transport system that relies on cleaner fuel.

Suggested ways to reduce CO2 emission are:

1. Carbon Tax
2. TDP or transferable discharge permit

Sources to be utilized for final project are:

www.altenergy.org

www.iea.org

www.unep.org

www.unepfi.org

 

www.un.org/en/globalissues/environment

 

www.epa.gov/international-cooperation

 

www. eia-international.org/

 

 

References:

 

Barbier and Edward.(2012).‘Economics and Ecology: New Frontiers and Sustainable Development’. Chapman &Hall

 

Enger D. (2008).‘Environmental Science: A study of Inter Relationship’Wm Brown Publishers

 

Purdom, Walton P. and Stanley M. (1983).‘Environmental Science- Managing the Environment’ Charles E. Merill Publishing Company.

 

Rothman H. (1972).‘Murderous Providence- A Study of Pollution in Industrial Societies’. Rupert Hart Davis, London

 

 

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