rate of future economic growth, but most of the economists involved in this study find it implausibly low. All the scenarios are “surprise free” in the sense that they ignore discontinuities such as embargoes, revolutions, natural disasters, international conflicts, and domestic strikes.

The value of models lies in the following.

  1. They allow “thought experiments” to be conducted on the likely consequences of specific policies such as supply constraints, energy taxes, mandatory efficiency standards, or price regulation.

  2. They allow testing of the sensitivity of outcomes (such as the rate of growth in energy consumption, or the relative consumption of various fuels) to varying input assumptions (such as economic growth rates, prices, population, work-force participation, or life-style preferences).

  3. They provide an accounting device that helps ensure internal consistency among the projections.

  4. They depict qualitative relations among the various factors affecting energy supply and demand. It is important to caution that the models do not usually prove qualitative statements, but rather illustrate them schematically.

CONAES has employed three different kinds of scenarios, each designed to answer different kinds of questions. The Modeling Resource Group (MRG)1 employed econometric models to estimate the consequences of various economic and policy assumptions for total energy consumption. These are equilibrium models in which prices are determined endogenously through the interaction of supply and demand schedules for energy resources (using optimization techniques that simulate a competitive market). The MRG investigated the effect on GNP of various policies and levels of energy consumption, modifying supply and demand schedules for such hypothetical possibilities as high or low discovery rates for resources and Btu taxes (i.e., taxes per Btu of primary energy input). The group used econometric models to compute the total net cost to the economy of limitations on various energy supply technologies (e.g., on the expansion of nuclear power, the development of oil shale resources, or the mining of coal). The work of the MRG was largely self-contained, as reported in detail in their report, and has not been used in the other models, although some comparisons between the MRG results and those of the other models are presented in this chapter.

The Demand and Conservation Panel focused on the demand for net energy delivered to the point of consumption (final demand), separated by different energy forms (i.e., electricity, gaseous fuels, liquid fuels, and coal). In the Demand and Conservation Panel’s models, energy prices are exogenous and are assumed to increase at various rates between 1975 and

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