Energy Policy and Economics

Energy Policy and Economics is an interdisciplinary field that analyzes how governmental actions and economic principles shape the production, distribution, and consumption of energy. It applies economic theory to evaluate the effects of policies—such as taxes, subsidies, and regulations—on energy markets, investment decisions, and consumer behavior. This applied science addresses critical challenges including energy security, environmental sustainability, and economic efficiency, aiming to create frameworks that balance these often-competing objectives for an affordable and reliable energy future.

1. Introduction to Energy Policy and Economics
   1. Defining Energy in an Economic Context
      1. Energy as a Commodity
         1. Physical Properties of Energy Commodities
         2. Storability and Transportation Characteristics
         3. Quality Differentials and Specifications
         4. Price Formation in Energy Markets
            1. Spot Market Pricing
            2. Forward and Futures Pricing
            3. Risk Premiums and Market Volatility
      2. Energy as a Service
         1. End-Use Energy Services
            1. Heating and Cooling Services
            2. Lighting Services
            3. Motive Power Services
            4. Process Heat Services
         2. Value of Energy Services to Consumers
            1. Consumer Surplus from Energy Services
            2. Willingness to Pay for Energy Services
            3. Service Quality and Reliability Premiums
      3. Units of Energy and Power
         1. Energy Units
            1. Joules and Kilojoules
            2. Calories and British Thermal Units (BTUs)
            3. Kilowatt-hours and Megawatt-hours
            4. Therms and Cubic Feet Equivalents
         2. Power Units
            1. Watts and Kilowatts
            2. Horsepower and Mechanical Power
            3. Peak vs. Average Power Concepts
         3. Conversion Factors and Efficiency
            1. Heat Rate and Thermal Efficiency
            2. Energy Content of Fuels
            3. Conversion Losses in Energy Systems
   2. Core Economic Principles
      1. Supply and Demand
         1. Law of Supply
            1. Producer Behavior and Cost Structures
            2. Supply Curve Derivation
         2. Law of Demand
            1. Consumer Preferences and Budget Constraints
            2. Demand Curve Derivation
         3. Market Dynamics
            1. Shifts in Supply and Demand Curves
            2. Movement Along vs. Shifts of Curves
            3. Simultaneous Supply and Demand Changes
      2. Market Equilibrium
         1. Determination of Equilibrium Price and Quantity
            1. Graphical and Mathematical Solutions
            2. Stability of Equilibrium
         2. Effects of Market Shocks
            1. Supply Disruptions
            2. Demand Surges
            3. Weather and Seasonal Effects
         3. Policy Interventions and Market Response
            1. Price Controls and Quantity Restrictions
            2. Tax and Subsidy Effects
      3. Elasticity Concepts
         1. Price Elasticity of Demand
            1. Calculation and Interpretation
            2. Factors Affecting Demand Elasticity
            3. Short-run vs. Long-run Elasticity
         2. Price Elasticity of Supply
            1. Supply Responsiveness to Price Changes
            2. Time Horizons and Supply Elasticity
         3. Cross-Price Elasticity
            1. Substitute and Complement Relationships
            2. Energy Source Substitution
         4. Income Elasticity
            1. Normal vs. Inferior Goods
            2. Luxury vs. Necessity Classifications
      4. Market Failures in Energy
         1. Externalities
            1. Negative Environmental Externalities
            2. Positive Network Externalities
            3. Internalization Mechanisms
         2. Public Goods Characteristics
            1. Non-rivalry and Non-excludability
            2. Energy Infrastructure as Public Goods
         3. Information Asymmetries
            1. Producer-Consumer Information Gaps
            2. Moral Hazard and Adverse Selection
         4. Natural Monopoly
            1. Economies of Scale in Energy Infrastructure
            2. Network Industries and Natural Monopoly
   3. The Role of Government in Energy Markets
      1. Rationale for Government Intervention
         1. Addressing Market Failures
            1. Correcting Externalities
            2. Providing Public Goods
            3. Regulating Natural Monopolies
         2. Promoting Energy Security
            1. Strategic Resource Management
            2. Infrastructure Protection
         3. Social and Distributional Concerns
            1. Universal Access to Energy Services
            2. Protecting Vulnerable Consumers
      2. Policy Goals and Objectives
         1. Economic Efficiency
            1. Allocative Efficiency
            2. Productive Efficiency
            3. Dynamic Efficiency and Innovation
         2. Environmental Protection
            1. Pollution Reduction
            2. Resource Conservation
            3. Climate Change Mitigation
         3. Social Equity
            1. Affordability and Access
            2. Distributional Justice
            3. Intergenerational Equity
         4. Security of Supply
            1. Reliability and Adequacy
            2. Resilience to Disruptions
            3. Strategic Autonomy