Subject: EBGN/ENGY
Number: 330
Course Title: Energy Economics
Section:
Semester/year: Spring 2016
Instructor or Coordinator: Ian Lange
Contact information (Office/Phone/Email): EH 329
Office hours: TR 1-2, W 10-11
Class meeting days/times: TR 11-12:15
Class meeting location: BE 108
Web Page/Blackboard link (if applicable):
Teaching Assistant (if applicable):
Contact information (Office/Phone/Email):
Instructional activity: ___ hours lecture
__0_ hours lab
___ semester hours
Course designation: __x_ Common Core ___ Distributed Science or Engineering
___ Major requirement _x__ Elective ___ Other (please describe
___________)
Course description from Bulletin:
Textbook and/or other requirement materials:
Required text: None
Other required supplemental information: Readings as specified/given on Blackboard
Students are welcome to refer to any resource or energy economics textbook, such as
International Energy Markets by Dahl or Environmental Economics: In theory and practice
by Hanley, Shogren and White
Student learning outcomes: At the conclusion of the class students will…
1. Optimal renewable and non-renewable resource use
2. Market structure effects on optimal use
3. Set-up of electricity markets
4. Basic market structure for fossil fuels
5. Economic reserves & what sustainability means in this context
6. Where to find basic data on energy supply and consumption
7. How to organize basic information in a paper/presentation
8. How to write/present your thoughts in a clear and concise manner
Brief list of topics covered:
1. Optimal harvest of a forest
2. Optimal extraction of a non-renewable resource (coal, oil, minerals, etc)
3. Structure of electricity markets
4. Markets for non-renewable resources
5. Reserves of non-renewables
6. Energy efficiency policy
7. Law of natural resources
Policy on academic integrity/misconduct: The Colorado School of Mines affirms the principle that all
individuals associated with the Mines academic community have a responsibility for establishing,
maintaining an fostering an understanding and appreciation for academic integrity. In broad terms, this
implies protecting the environment of mutual trust within which scholarly exchange occurs, supporting the
ability of the faculty to fairly and effectively evaluate every student’s academic achievements, and giving
credence to the university’s educational mission, its scholarly objectives and the substance of the
degrees it awards. The protection of academic integrity requires there to be clear and consistent
standards, as well as confrontation and sanctions when individuals violate those standards. The Colorado
School of Mines desires an environment free of any and all forms of academic misconduct and expects
students to act with integrity at all times.
Academic misconduct is the intentional act of fraud, in which an individual seeks to claim credit for the
work and efforts of another without authorization, or uses unauthorized materials or fabricated information
in any academic exercise. Student Academic Misconduct arises when a student violates the principle of
academic integrity. Such behavior erodes mutual trust, distorts the fair evaluation of academic
achievements, violates the ethical code of behavior upon which education and scholarship rest, and
undermines the credibility of the university. Because of the serious institutional and individual
ramifications, student misconduct arising from violations of academic integrity is not tolerated at Mines. If
a student is found to have engaged in such misconduct sanctions such as change of a grade, loss of
institutional privileges, or academic suspension or dismissal may be imposed.
The complete policy is online.
Grading Procedures:
Test 1: 25%
Test 2: 25%
Final: 30%
Group Presentation: 20%
Tests are a mixture of definitions and short answer.
Class will vote on the preferred specification of the final exam.
For the group presentation, approximately four students will put together a 10 minute presentation on:
(i)The energy balance of a country [what resources do they have, consume, export, import, etc] or
(ii) An evaluation of a proposed piece of energy policy [what is it, merits, drawbacks, who is for/against it]
or
(iii) A report or academic article of interest to the group, or
(iv) A board meeting where the presenters are trying to convince upper management to invest in a
project, enter a new market, or related decisions.
Please have the topic of your group’s presentation approved by me. The goal behind the presentations is
to provide the class with additional information about energy policy outside of my lectures. Presentations
will be marked on their clarity, depth of understanding shown, and quality. It is expected that each
member of the group will speak during the presentation. In the first meeting, I will provide guidance on
giving a presentation. There will be no more than two presentations at each meeting, not including tests,
beginning with the week of January 26.
Coursework Return Policy: The goal is to get coursework feedback within two week.
Absence Policy (e.g., Sports/Activities Policy): Please notify me ahead of time if you will be absent for
tests or the final.
Detailed Course Schedule:

Week 1 (January 11): Introduction to Course

Week 2 (January 18): Background Information on Energy Markets

Week 3 (January 25): Optimal Use of Renewable and Non-renewable resources
Brown (Section 3.2, p 887-889); Krautkraemer (Section 1 and 2; p 2065-2069);

Week 4 (February 1): More Optimal Extraction of Non-Renewable Resource
Hotelling; Anderson, Kellogg, and Salant;

Week 5 (February 8): No class Tuesday for Career Day; Thursday: Exploration Incentives
Lin; Philip Haile, Kenneth Hendricks, and Robert Porter

Week 6 (February 15): Reserves of Non-renewables
Krautkraemer (Section 5; p 2087-2091)

Week 7 (February 22): Review & Test 1

Week 8 (February 29): Issues in Petroleum-Forecasting and Speculation
Mu and Ye; Buyuksahin and Harris

Week 9 (March 7): Legal & Regulatory Issues around energy business
Libecap and Smith; Stigler

Week 10 (March 14): No class-Spring break

Week 11 (March 21): Hedging in Energy Markets

Week 12 (March 28): Behavioral Energy Issues Tuesday; No class Thursday
Allcott, H. and Mullainathan

Week 13 (April 4): Review and Test 2

Week 14 (April 11): Basics of the Electricity Markets & Regulation
Bushnell and Borenstein

Week 15 (April 18): Energy Efficiency Policy
Allcot and Greenstone; Fowlie, Greenstone, and Wolfram

Week 16 (April 25): Anything else? What do you want to know about?

Week 17 (May 2): Catch-Up\Review for Final
List of Readings (In Order):
Gardner Brown. Renewable Natural Resource Management and Use without Markets. Journal of
Economic Literature Vol 38, No. 4 (Dec 2000 )pp 875-914
http://www.jstor.org/stable/2698664
Jeffrey A. Krautkraemer. Nonrenewable Resource Scarcity. Journal of Economic
Literature, Vol. 36, No. 4 (Dec., 1998), pp. 2065-2107
http://www.jstor.org/stable/2565047
Harold Hotelling. The Economics of Exhaustible Resources. The Journal of Political
Economy, Vol. 39, No. 2 (Apr., 1931), pp. 137-175
http://www.jstor.org/stable/1822328
Soren Anderson, Ryan Kellogg, and Stephen Salant. Hotelling Under Pressure. NBER Working paper
20280 (2014)
http://www-personal.umich.edu/~kelloggr/HotellingPressure_140103.pdf
Cynthia Lin. Strategic decision-making with information and extraction externalities: A structural model of
the multi-stage investment timing game in offshore petroleum production. Review of Economics and
Statistics, 95 (5), (2013) 1601-1621.
http://www.des.ucdavis.edu/faculty/Lin/oil_investtiming_struc_paper.pdf
Philip Haile; Kenneth Hendricks; Robert Porter. Recent U.S. Offshore Oil and Gas Lease Bidding: A
Progress Report International Journal of Industrial Organization, 28, (July 2010) 390-396.
http://ssc.wisc.edu/~hendrick/publications/ProgressReportonRecentOffshoreAuctions.pdf
Bahattin Buyuksahin and Jeffery Harris, Do Speculators Drive Crude Oil Futures Prices? The Energy
Journal Vol 32, No 2 (2011) pp167-202
On Blackboard
Shawn Mu and Haichun Ye. Small Trends and Big Cycles in Crude Oil Prices. Energy Journal.
2014;36(1), 49-71
On Blackboard
Gary Libecap & James Smith. 2002. The Economic Evolution of Petroleum Property Rights
in the United States. Journal of Legal Studies, Vol. 31(2), pages S589-608.
http://www.icer.it/docs/wp2002/libecap25-02.pdf
George J. Stigler. 1971. The Theory of Economic Regulation. Bell Journal of Economics,
Vol. 2(1), pages 3-21.
http://www.jstor.org/stable/3003160
James Bushnell and Severin Borenstein. Electricity Restructuring: Deregulation or Reregulation.
Regulation. Vol 23(2), 46-52.
http://faculty.haas.berkeley.edu/borenste/download/Regulation00ElecRestruc.pdf
Meredith Fowlie, Michael Greenstone, and Catherine Wolfram. Do Energy Efficiency Investments
Deliver? Evidence from the Weatherization Assistance Program
https://economics.stanford.edu/files/Fowlie-Greenstone-Wolfram%20-%20Do%20Energy%20Efficiency%20Investments%20Deliver.pdf
Allcott H. and Greenstone, M. Is there an energy efficiency gap? Journal of Economic Perspectives Vol
26, No 1, (Winter 2012) pp 3-28
http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.26.1.3
Allcott, H. and Mullainathan, S., Behavior and Energy Policy, Science, Vol 327
(March 5 2010), Supplement
https://files.nyu.edu/ha32/public/research/Allcott%20and%20Mullainathan%202010%20-%20Behavioral%
20Science%20and%20Energy%20Policy.pdf
Note: You must be accessing the links through the CSM server in order to view most of them.