Question

1)    Electricity use per capita is lower in California than in most of the U.S., and has been growing slower in California over the past thirty years than in most of the country. You have been hired to advise a different state or country on how to improve energy efficiency. Drawing on the experience in California, what do you recommend? (Be sure to state WHICH state or country you are advising!).

2) Provide intuition. Under the Hotelling model of exhaustible resources, the price net of costs of the resource increases at the real interest rate.

3)In 2008 the spot price of oil (West Texas Intermediate) was about $26/barrel. In 2011 it rose to over $100/barrel, where it stayed until mid-2014. Over the next six months, the price fell to under $50/barrel then to around $30/barrel. Over the past two years the price has increased and today is around $65 per barrel.

   b. What factors do you believe are important for the changes we have observed in the past 10 years?

Answer 1

1. I would be advising India . Given the energy consumption in india , rural settelements are deprived of electricity and urban areas misuse most of the electricity. The electricity per person can be reduced by first increasing awarness and realising the value of energy. The misuse of electricity / theft of electricity can be curbed by putting slabs as to consumption of electricity with different price ranges.

2. It happens so because resources being exhaustible has a value and due of its rate of extraction.

3.price of Oil is influenced by oil shocks .The gulf crisis , opec and demand and supply of oil , market structure (cartel) are few factors responsible for sudden shifts n price.