An integrated industry model of petroleum refining, electric power, and chemicals industries for costing pollution control and estimating energy prices

Abstract

National policy is currently placing increasingly restrictive limitations on discharges of both air and water pollutants which will have widespread impact on the industries involved as well as the national economy. Because government policies affect the fundamental structure of markets, historical data are not sufficient to forecast the cost, market, and ripple effects of major changes in government policy. Historical data must be augmented with a synthesis of technical information into an economic framework to deal intelligently with the problem on a policy level. This paper reviews detailed work presented in three monographs [1,2,3] and gives key examples of how technical information may be synthesized into a comprehensive economic model to evaluate the industry cost, market price, and economic impact of restrictive waste discharge standards for the petroleum refining, electric power, and important chemical industries. Results are presented showing the industry costs, where price inflation is ignored, of increasingly restrictive standards for major water and air pollutants. A brief description is provided of how this keystone industry model has been interfaced with resource supply and end product demand models to estimate market price effects; and in turn, these market results have been used to determine the economic impact of different effluent standards.