THE SITUATION ANALYSIS

The Situation Analysis



The Situation Analysis

Introduction

This paper is based on the crisis situation faced by the energy companies. Although industrialization means an increase in an economy's use of energy, the intensity with which an economy uses its energy tends to diminish. For instance, Natural Resources Canada (2009) reports that the aggregate energy intensity of Canadian industry was 13,000 Btu (13.6 megajoules) per 1997 dollar of gross domestic product in 1990, which falls to 11,000 Btu (11.3 megajoules) per 1997 dollar in 2006 (Warnig, 2008).

Declining energy intensity of industries and of entire economies is characteristic of most industries in most countries, although readers will see that energy prices or attempts to achieve greater energy efficiency are not necessarily driving these changes.

(Lea, 2008) evaluate the research on energy intensity in a paper that, although not explicitly a survey, includes references to numerous other surveys of the evidence. The most common outcome researchers identify is reduced energy intensity over time, accounted for either by industry-wide changes in energy intensity, which they refer to as intensity effects, or by changes in the mix of products within an industry, which can be a shift to a more or a less energy-intensive mix of products, which they refer to as structural effects. In Liu and Ang's review, the modal outcome is industry-wide reductions in energy intensity and a less energy-intensive mix of products, although many studies uncover a switch to a more energy-intensive mix of products that is offset by industry-wide reductions in energy intensity (Gollop, 2008). The article focuses on improving index number techniques, leaving work on the sources of changing intensity, whether driven by prices or by factor-neutral technical change, for future research. Readers will see that such research will be of value for policy makers coping with resource depletion and environmental degradation as consequences of energy use.

Situation Analysis

It is argued that energy-surplus countries tend to suffer from a deficit of democracy. Underlying this widespread perception is the assumption that oil revenues provide antidemocratic, authoritarian governments with the wherewithal to either buy off or repress political dissent (Filipovic, 2008). “Dutch disease” is the economic version of such “oil curse” arguments. Here the argument turns around the assumption that a booming natural extractive sector leads to stagnation or even deindustrialization in the manufacturing sector, leading to an imbalanced economic growth (Boyd, 2006). While such analyses of the “oil curse” may initially seem to capture some of the salient features of political economies of energy-rich oil states, they tend to obscure more than they reveal.

The process of privatizing the market involved the organizational and legal unbundling of various elements of the energy system into distinct energy-related goods and services, production, transmission, and distribution systems, open to different and multiple suppliers. Where vertically integrated energy companies are permitted to own the transmission network, they must have it managed by a completely independent company or body. The open-market approach is intended to provide universal service with quality, consumer protection, and secure ...