Abstract

This chapter examines the topic of energy policy in Egypt on several fronts. Section 1 examines the world energy market with reasonable estimates of future prices for oil and natural gas, such that the “most likely” scenario from the US Department of Energy's Information Administration database. Section 2 analyzes the energy sector in Egypt including historical production, consumption, and net exports of energy resources. In addition, the research tackles when and to what extent Egypt will turn into a net importer of oil, and analyzes the trend of such behavior. Derivation of a time path for natural gas resource depletion, based upon proven reserves, and a forecasted timeline of natural gas consumption until 2025 is conducted. This is based upon comparative elasticity analysis between oil and natural gas including the calculation of price elasticity, income elasticity, and energy/GDP elasticity for both resources, and the calculation of the elasticity of substitution between oil and natural gas. The analysis also includes an energy sustainability constraint (via an application of Hartwick's model) on resource extraction rates, with the objective of guaranteeing future expected energy demand, conditional upon GDP growth rate targets, which guarantee sustainable development. Energy sustainability analysis incorporates alternative energy use including solar and nuclear energy. Section 4 offers policy recommendations.

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