by Permanently_Baffled » Wed 22 Feb 2006, 18:18:28
$this->bbcode_second_pass_quote('Aaron', '')$this->bbcode_second_pass_quote('', 'C')onservation / efficiency in a declining energy situation will be about getting more out of the energy that is available to economies and societies(less being available because of geology and price). Countries will struggle to finance their oil bills , so the more you can get out of what you can afford the better?
I don't think so Perm.
Jevon is a relative measurement... not absolute.
Measured against what would have
otherwise been possible, so to speak.
The same argument you make can be applied to the efficiency increases.
If energy supplies are shrinking, then efficiency gains are also muted.But it's the relative measurement that counts.
Absent any given efficiency gain for example, what would energy price have been?
With any given savings thru efficiency, what price?
The difference is Jevon's paradox.
Firstly, acknowledged - the price difference between the current price and the price post-efficiencies represent "Jevons Paradox".
But the crux of Jevons , is that through the price becoming cheaper, more consumers end up in the market and consumption MAY actually increase.
In the case of PO though, consumption CANNOT increase , as the resource production is in decline.
Because the resource is in decline, the price will remain high, therefore consumers are still incentivised to curb consumption or look for alternatives.
Also , the price is inflated ahead of the true supply = demand price because of the anticipation of future scarcity. This must be true , otherwise preceding any price increase in oil there would be physical shortages.
Also you acknowledge in your post (highlighted) that efficiency gains are muted when supply is in decline. This means that yes , even though you are more efficient in the use of fuel the price remains the same, so you are incentivised to improve efficiency further to get the same "work" acheived for less or the same money. As I say , it will be about get the most out of the energy you can secure. The more efficiency the more necessary industries that can function while a transition to another energy source is undertaken.
If a country can only physically afford say 1 mpd at $50 a day , then at $100 they can only afford 500K a day.
Therefore consumers in that country will change their behaviour at the new price, this maybe through demand destruction , or it will be through acheiving the same work using less oil (efficiency / conservation).
Normally the price would drop as a result, but as oil production is declining the price still stays at $100 (and beyond), so Jevons assertion of increased consumption doesn't come true.
$this->bbcode_second_pass_quote('', '
')In economics, the Jevons' Paradox is an observation made by William Stanley Jevons who stated that as technological improvements increase the efficiency with which a resource is used, total consumption of that resource may increase, rather than decrease. It is historically called the Jevons' Paradox since it ran counter to Jevons' own intuition, but it is not a paradox at all and is well understood by modern economic theory which shows that improved
resource efficiency may trigger a change in the overall consumption of that resource, but the direction of that change depends on other economic variables.
One way to understand this is to observe that an increase in the efficiency with which a resource (e.g., fuel) is used is effectively equivalent to a decrease in the price of what the use of that resource achieves (e.g., work). Generally speaking, a decrease in price will be associated with an increase in demand. (Thus with a lower price for work, more work will be "purchased".) This increase in demand for the results of using the resource may, or may not, be large enough to offset the original efficiency gain. In the simplest case, if the cost of fuel remains constant, but the efficiency of its conversion into work is doubled, the effective price of work is halved and so more work will be purchased. If the amount of extra work purchased more than doubles, in this case, then the demand for fuel would actually increase, not decrease. A full analysis would have to take into account the fact that a change in the demand for fuel would also have an effect on the price of fuel, and therefore on the effective price of work, also.
In his 1865 book The Coal Question Jevons observed that England's consumption of coal soared after James Watt introduced his coal-fired steam engine, which greatly improved the efficiency of Thomas Newcomen's earlier design. Watt's innovations made coal a more cost effective power source, leading to increased use of his steam engine in a wide range of industries. This in turn made total coal consumption rise, even as the amount of coal required for any particular application fell.