Price Projections Research Articles

Climate change and household welfare in sub-Saharan Africa: empirical evidence from Swaziland

The fifth assessment report of the Intergovernmental Panel on Climate Change and several studies suggest that climate change is expected to increase food insecurity and poverty in many parts of the world. In this paper, we adopt a microeconometric approach to empirically estimate the impact of climate change-induced hikes in cereal prices on household welfare in Swaziland (also Kingdom of Eswatini). We do so first by econometrically estimating expenditure and price elasticities of five food groups consumed by households in Swaziland using the Almost Ideal Demand System (AIDS), based on data from the 2009/2010 Swaziland Household Income and Expenditure Survey. Second, we use the estimated expenditure and compensated elasticities from the AIDS model, food shares from the household survey, and food price projections developed by the International Food Policy Research Institute (IFPRI) to estimate the proportionate increase in income required to maintain the level of household utility that would have prevailed absent an increase in food prices. Our results show increases in cereal prices due to climate change are expected to double extreme poverty in urban areas and increase poverty in rural areas of the country to staggering levels - between 71 and 75%, compared to 63% before the price changes. Income transfers of between 17.5 and 25.4% of pre-change expenditures are needed to avoid the welfare losses.

Economic-Financial Metanalysis of Termination of Nellore Cattle in Feedlot in Brazil

This study aimed to evaluate the economic and financial viability of the creation of Nellore cattle in feedlot in Brazil. To do so, we performed a meta-analysis of productive data of Brazilian research published in the last ten years, and before the data, simulated to economic analysis. Three scenarios were simulated, the first according to projections of commodity prices, the second with a reduction of 10% of those prices and the third with an increase of 10%. In first scenario the termination provided positive net income, with total factor productivity (TFP) of R$ 1.04. On the other hand, with the increase of 10% of the costs of production, there is an income and a negative rate of return. On the other hand, with a reduction of 10% of the costs of production, the system will only 1,289 animals and, at the same time, the TFP shall be 1.16, with a return rate of 16.32%. We observed payback with values of less than one year, but with an increase of 10% on the cost with feeding all indicators were negative. Sensitivity analyzes showed that in most scenarios evaluated, only in situations more unfavorable economic performance indicators were not attractive. A meta-analysis of data from the termination of bovine animals shows that, before the current scenario, the price of commodities provides favorable economic indices, but with a negative variation of 10% on the price of the same, the indicators are to be negative, even with the price of the @ remaining stable.

Kazanılmış Değer Yönetimi Uygulamaları ve Geleceği: Türkiye Örneği

This paper examines the Earned Value Management (EVM) practices in Turkey. The authors identify the factors affecting the awareness and implementation of the methodology and derive implications for its future use. A comprehensive questionnaire was designed and semi structured interviews were conducted with experienced managers from several industries. This study is original in the sense that it brings an in depth analysis on the factors affecting the acceptance and frequency of use of EVM in Turkey. The authors report that the industry, project management experience, role in projects and the use of project management software are the factors that affect EVM awareness. Regarding the implementation, the authors observe that respondents who work in defense and production sectors are more likely to use EVM. Companies that are using lump-sum and unit price projects are more likely to use EVM while companies that are using in-house projects are less likely.

Economic performance of pyrolysis of mixed plastic waste: Open-loop versus closed-loop recycling

In recent decades new recycling technologies for mixed plastic waste have emerged. In pyrolysis, the polymer chains are thermally broken (pyrolyzed) to obtain hydrocarbon materials of different molecular weights such as naphtha, oil or waxes, whose yields can be controlled by varying the reaction parameters. Naphtha represents a closed-loop recycling process as it is a feedstock for (poly)olefins; while the co-production of waxes, having several applications in e.g. the construction industry, exemplifies an open-loop recycling process. This paper compares the economic performance of the pyrolysis of mixed polyolefin waste in a closed-loop and open-loop scheme, including a probabilistic approach to the most important variables. From an economic perspective, open-loop pyrolysis as presented outperforms closed-loop recycling, due to the high prices of wax. However, the results present a high dispersion caused by the volatility of the prices of crude oil and its derivates. Considering the current oil price projections, our case study analysis showed that for open-loop recycling there is a future probability of almost a 98% of observing positive results and around 57% of probability in the case of closed-loop recycling, under the assumptions made. Yet, in a future scenario where decarbonized electricity would decrease oil prices, the probability of a positive outcome reduces to 57% for the open-loop case and to less than 8% in the case of closed-loop recycling. To make these pathways attractive to investors, the nameplate capacity should be at least 70 kt/year for open-loop recycling and 115 kt/year for closed-loop recycling. A 120 kt/year plant should operate minimally at 80% of its capacity for open-loop recycling, while closed-loop recycling would demand running close to maximum capacity. Security of feedstock supply therefore is required.

An Analysis of the Impact of Climate Change on the Korean Onion Market

Purpose: Agriculture, which is heavily influenced by climate conditions, is one of the industries most affected by climate change. In this respect, various studies on the impact of climate change on the agricultural market have been conducted. Since climate change is a long-term phenomenon for more than a decade, long-term projections of agricultural prices as well as climate variables are needed to properly analyze the impact of climate change on the agricultural market. However, these long-term price projections are often major constraints on studies of climate changes. The purpose of this study is to analyze the impacts of climate changes on the Korean onion market using ex-post analysis approach in order to avoid the difficulties of long-term price projections. Research design, data and methodology: This study develops an annual dynamic partial equilibrium model of Korean onion market. The behavioral equations of the model were estimated by OLS based on the annual data from 1988 to 2018. The modelling system is first simulated to have actual onion market conditions from 2014 to 2018 as a baseline and then compared it to the scenario assuming the climatic conditions under RCP8.5 over the same period. Scenario analyses were simulated by both comparative static and dynamic approach to evaluate the differences between the two approaches. Results: According to the empirical results, if the climate conditions under RCP8.5 were applied from 2014 to 2018, the yield of onion would increase by about 4%, and the price of onion would decrease from 3.7% to 17.4%. In addition, the average price fluctuation rate over the five years under RCP8.5 climate conditions is 56%, which is more volatile than 46% under actual climate conditions. Empirical results also show that the price decreases have been alleviated in dynamic model compared with comparative static model. Conclusions: Empirical results show that climate change is expected to increase onion yields and reduce onion prices. Therefore, the appropriate countermeasures against climate change in Korean onion market should be found in the stabilization of supply and demand for price stabilization rather than technical aspects such as the development of new varieties to increase productivity.

Fuel replacement: a possible option for Thailand energy security?

Natural gas has been playing an important role in strengthening energy security of Thailand as over 60 percent of total natural gas consumed in the country is from the Gulf of Thailand. In the past 20 years, the average growth of natural gas demand is 5.5 percent per year. Thanks to its low carbon content, natural gas is considered as cleaner fuel comparing to other fossil-based fuels. Still, there are usages of carbon-intensive fuels such as fuel oil and coal in Thailand e.g. in the industrial sector. Most of fuel oil and coal consumed are imported from foreign countries. Replacing these fuels with natural gas may be an option for the country to promote domestic clean energy and reduce overall carbon emissions. This paper forecasts the possibility of replacing fuel oil and coal in the industrial sector with natural gas. The research starts with examining the limitations of Thai regulations, estimating the amount of natural gas required for the replacement, and forecasting future prices of all three fuels. The price projection shows an attractive option for fuel oil users as the long term price of natural gas is projected to be lower than that of fuel oil. On the contrary, the projected coal price alone will not encourage coal users to switch their fuels. Thus, strong government measures will be required to stimulate coal replacement. The result of the study will be useful for determining appropriate policies to support long-term demand for natural gas of the country.

Influencing Factors in Congestion Pricing Acceptability: A Literature Review

Roads congestion pricing has been considered as an effective solution following the successful implementation of such programs by many cities such as Singapore, Stockholm, and London. In multiple cases, congestion pricing projects have not been implemented, and multitudinous industrialized countries’ governments are struggling to find an effective and satisfactory way of introducing congestion pricing schemes that will not be affected by the public’s negative opinion and resistance. The lack of political and public acceptability can, therefore, be blamed for the nonimplementation of many congestion pricing projects in many cities around the world. This paper reviews eight cases where congestion pricing schemes were implemented or rejected, as well as the major influencing factors that enable congestion pricing introduction and acceptability by road users, discusses public and political acceptance of urban road pricing, and provides a valuable guideline for policy and decision-makers.

The impact of commodity price shocks among regional economies of a developing country

Volatile commodity prices have become commonplace in the world economy. Although is widely accepted that commodity‐rich countries are affected by this phenomenon, information about how commodity price shocks impacts their regional economies is scarce. This work analyses how shocks in copper prices impact the economies of the major copper‐producing regions in a developing country, such as Chile. To achieve this goal, a two‐step method is implemented. First, we estimate long‐term copper prices using the Wets and Rios approach (2015) and these estimates are then contrasted with those forecast by the Chilean public advisory committee. Second, a general equilibrium model is implemented to simulate the effects of both expansive and restrictive copper price cycles within major producing regions in Chile. Our results show that the proposed approach yields more homogeneous price projections than those made by the Chilean Government, which, in turn, are very close to variations in response to negative shocks. The price simulations confirm that price cycles affect the savings of government and business, which directly dampens regional production, mainly via investment, capital mobilisation and diversification of production. Because of this, fiscal revenues generated by copper sales act as a trade cycle term multiplier in regional economies. Overall, within copper‐producing regions, we suggest implementing long‐term policies to improve profit distribution efficiency.

Overcapacity in European power systems: Analysis and robust optimization approach

The planning of national power systems is traditionally based on long-term forecasts of electricity demand and fuel prices. However, over such long time horizons (20–50 years), these forecasts often prove to be inaccurate. As an example, wrong projections of low natural gas prices and high electricity demand in Europe in the early 2000s stimulated massive investments in electricity generation, which led to the current situation of overcapacity in the European electricity market. In this work, we first present the issue of overcapacity in Europe and discuss its causes; in particular, we highlight the relationship between overcapacity and errors in forecasts of electricity demand and fuel prices. Then, we apply a novel robust optimization framework to a real-world strategic energy planning problem, and compare it to the standard, deterministic decision-making approach. The results show that the robust investment strategies are up to 58% less likely to require future modifications leading to overcapacity. Overall, this suggests that considering uncertainties in the long-term planning process can reduce the risk of generating overcapacity in national power systems.

Global fossil-fuel subsidy reform and Paris Agreement

The recent downward trend in the international energy prices, combined with the rapid transition in the national energy mix and widespread efforts towards national energy market liberalization have challenged the mitigation potential of the global fossil-fuel subsidy reform. In this paper, we focus on 25 countries with large fossil-fuel consumption subsidies and estimate the impacts of fossil-fuel subsidy reform on achieving country-specific emissions reduction targets defined by the Nationally Determined Contributions (NDCs) under different oil price projections. Our results suggest that the elimination of the fossil-fuel consumption subsidies could be an effective mechanism for meeting NDC targets for an important subset of countries, even if only leading to global emissions reduction of between 1.8 and 3.2% in 2030 depending on the oil price scenario. Out of 17 countries with binding unconditional NDC targets, nine overreach their 2030 commitments under high oil price scenario and six under low global oil prices. Furthermore, eleven countries reach at least 50% of their NDC reduction targets following subsidies elimination under low global oil price path.

PBI69 INSIGHTS INTO FUTURE AUTOIMMUNE PRICING DYNAMICS IN EU5 & THE US, USING LEARNINGS FROM RHEUMATOID ARTHRITIS

The rheumatoid arthritis (RA) market has historically had many ‘disruptive’ events (new products and classes, indications extensions, biosimilar launches and new formulations) influencing pricing. The objective for this project was to take learnings from these historical events and apply to an auto-immune condition to predict future price changes in EU5 and the US. An RA price evolution was conducted for EU5 and the US, highlighting key disruptive events and subsequent impact on price. A ‘matching exercise’ between those in the auto-immune space and analogous RA products allowed formation of price projections in each market. In the US, ∼5% annual list price inflation is expected, with pricing dynamics occurring at the net price level. LoE events or biosimilar introduction in the near term (the next 5-7 years) is not expected to significantly impact net price. Although net price is expected to decline with time on the market and class crowding (∼30% reductions seen with anti-TNFs). Conversely, in European markets, disruptive events are expected to change list pricing dynamics. In France especially, a cross-therapy price convergence is expected, catalysed by biosimilar introduction and LoE events. Originator list price erosions may be as high as 40% in 5 years (seen post-biosimilar launch). Dissociation from biosimilar benchmarks may be possible for new launches by targeting sub-groups with a greater unmet need (with 5-15% price premiums seen in RA), and may have a lower long-term list price erosion. In Germany, list prices are expected to remain stable over time unless a biosimilar launch reaches ∼20% market share, causing a formation of reference price group with the originator; then list price drops are expected. The auto-immune space is set to become more competitive, with products across EU5 and the US providing discounts to remain competitive

PRICE DETERMINATION MODEL OF WORLD VEGETABLE AND PETROLEUM

The increasing as non-food uses of vegetable oils especially as biodiesel and the basis of the oleo-chemical industry, making the formation of vegetable oil prices in world trade has been linked to world prices of crude oil in addition to linkages with the world price of vegetable oils competitor. The objectives of study were to analyze the linkage of the world price of crude and vegetable oil simultaneously, and examine the impact of the changes of the external factors and trade policy by the vegetable oil’s exporting countries and importing countries on the world trade of vegetable oils, and particularly the production, domestic supply, domestic consumption and exports volumes of Indonesian palm oil. The study employed an econometric model and parameters were estimated using Two Stage Least Squares methods for the period 1990-2017. The study found that real price projections in the world market of 2012-2025 periods show the price fluctuations of crude oil and vegetable oil tend to have same patterns with slightly trend to increases. Although positively correlated, the percentage increase of vegetable oils price as the effect of the increasing of crude oil price is less than the percentage change of crude oil prices, except for soybean oil prices that vista vies with the percentage change of crude oil prices. The effect on percentage change of price of soybean oils is the highest and then followed by palm oil. Beside the chemical characteristics, the condition related to the limited volumes of vegetable oils world’s productions and the food sector needs as a main constraints in the use of vegetable oils as crude oil substitutes. As annual crop commodities and the substitutes of seed oils, however, palm oil price has more responsive to export fluctuation then it. Keywords: price formation, world trade, vegetable oil, petroleum JEL Classifications: D43, F15, Q41, Q42 DOI: https://doi.org/10.32479/ijeep.7916

Marriage-induced homeownership as a driver of housing booms: evidence from Hong Kong

Buying a home for marriage is customary in many societies. Traditionally, therefore, young couples getting married is a key driver of demand for homeownership. Yet the idea of marriage-induced demand for homeownership is a relatively underexplored component of housing price change. We examine the role of marriage-induced demand for homeownership in Hong Kong, a relatively self-contained housing market with fewer options for migration than most large cities. We use an instrumental variable strategy to test the hypothesis that more unmarried individuals at the prime age for marriage increases housing prices. We find that an additional one thousand marriage-aged but unmarried individuals leads to a seven per cent increase in housing prices. These findings confirm the importance of demographic factors such as cohort size and marriage rates on housing price projections, housing needs assessments, and housing policy.

Bond Flotation with Exotic Commodity Collateral

Exotic high tech metals such as rare earth oxides, titanium and nickel wire are increasingly important to semi-conductor, aerospace and high end defence technology R & D and production. As a result – while not market traded and therefore sporadic order dependent and highly volatile – prices of these commodities have been rising on average over the past decade. The metals trading subsidiary of an international group acquired over 6 M metres of nickel wire which at the current market price of about 300 EUR per metre is worth over 1.6 B EUR. The firm wished to raise from 300 M to 1B EUR in the capital markets in order to purchase a variety of these high tech metals to take advantage over the medium term (5 to 10 years) of generally rising prices. After a brief description of the current state of the exotic high tech metalss markets, this paper treats the technical pricing and default risk analysis of an example 350 M EUR 7 year amortized corporate bond issue backed by a nickel wire inventory and subsequent high tech metal trading as collateral. Topics covered include security modelling with high tech metal collateral, the design of 100% risk free securities with third party derivatives and security pricing and trading methodology. The complex stochastic analysis and Monte Carlo simulation analysis presented is based in part on specially developed modelling of the nickel wire catalogue price and third party price projections for rare earth oxides and titanium. The analysis is based on 10 year (2008-2017) daily market data and supports an optimistic view in that after accounting for all ongoing costs we find a zero default probability for the bond issue – a situation seldom seen to accompany its stipulated 12% internal rate of return.

The Efficacy of the Tolling Model’s Ability to Improve Project Profitability on International Steel Plants

To overcome profitability deterioration in executing steel price projects, companies are seeking overseas expansion, which increases market size while reducing profit certainty. Special purpose companies (SPCs) have been found to better manage these risks through tolling agreements which transfer the local pricing volatility risks (raw material, steel sales, licensing and income tax) to the project sponsor. The energy market has benefited from policy changes allowing the use of the tolling model, finding an increase in profitability for both project sponsors and SPCs through more effective risk sharing. While successes have been published in the energy, gas, and highway sectors, the tolling model’s efficacy has yet to be tested on the steel sector. As such, this research adds to the existing body of knowledge by testing the financial feasibility of using the tolling model on three million ton/year capacity steel projects. The data analyzed has been collected from “Company A”, a company with 50 years of domestic and 20 years international steel-iron plant project execution and operation experience. An economic analysis is performed on the best, most likely, and worst-case cost/revenue scenarios of a virtual project (which represents the average of all Company A projects) and two Company A projects under construction/operation. The findings support the use of the tolling model in volatile markets, showing a net present value (NPV) profitability increase of up to $940 versus the traditional project company model under worst case market conditions. However, the traditional project company model was found to be superior in best case market conditions. With these findings, international steel companies are able to consider alternative financing structures when executing projects in volatile markets, potentially resulting in greater project sponsor and SPC profit.

The Dynamics of Financial Markets: Fibonacci Numbers, Elliott Waves, and Solitons

In this paper information theoretical approach is applied to the description of financial markets A model which is expected to describe the markets dynamics is presented. It is shown the possibility to describe market trend and cycle dynamics from a unified viewpoint. The model predictions comparatively well suit Fibonacci ratios and numbers used for the analysis of market price and time projections. It proves possible to link time and price projections, thus allowing increase the accuracy of predicting well in advance the moment of trend termination. The model is tested against real data from the stock and financial markets.

Global Fossil-fuel Subsidy Reform and Paris Agreement

The recent downward trend in the international energy prices, combined with the rapid transition in the national energy mix and widespread efforts towards national energy market liberalization have challenged the mitigation potential of the global fossil-fuel subsidy reform. In this paper, we focus on 25 countries with large fossil-fuel consumption subsidies and estimate the impacts of fossil-fuel subsidy reform on achieving country-specific emissions reduction targets defined by the Nationally Determined Contributions (NDCs) under different oil price projections. Our results suggest that the elimination of the fossil-fuel consumption subsidies could be an efficient mechanism for meeting NDC targets for an important subset of countries, even if only leading to global emissions reduction of between 1.8-3.2% in 2030 depending on the oil price scenario. Out of 17 countries with binding unconditional NDC targets, nine overreach their 2030 commitments under high oil price scenario and six under low global oil prices. Furthermore, eleven countries reach at least 50% of their NDC reduction targets following subsidies elimination under low global oil price path.

A Techno-Economic Analysis of Methane Mitigation Potential from Reported Venting at Oil Production Sites in Alberta.

The technical and economic potential for reducing methane emissions from reported venting and flaring volumes in 2015 at 9422 upstream oil production sites in Alberta, Canada was evaluated in a comprehensive site-by-site analysis. For each site, up to six different technologies for mitigation were considered, based on conserving gas into pipelines, combusting gas on site, or using gas for on-site fuel. Economic viability of mitigation was calculated using current economic parameters and gas price projections on a net present cost basis. Monte Carlo simulations suggest that a 45% reduction in methane emissions (consistent with current federal and provincial targets) from reported flaring and venting is technically and economically feasible at overall average costs ranging from $-2.98 CAD/tCO2e (i.e., a profit) to $2.51 CAD/tCO2e with no one site paying more than $11.02 CAD/tCO2e. If the reported baseline emissions are augmented to reflect results of recent airborne measurements, overall economics of mitigation generally improve due to larger available gas volumes at many sites. Considering federal carbon price targets of $50 CAD/tCO2e by 2022, there are relevant economic opportunities for mitigating methane from reported venting and flaring volumes well beyond a 45% reduction. This could partially offset the challenge in addressing the additional methane emissions from fugitive and unreported venting sources.

Are published oil price forecasts efficient?

AbstractOil prices are crucial for a wide area of economic decisions ranging from households over business to economic policymaking. Therefore, oil price projections are a crucial input to economic models and to economic activity forecasts. This paper assesses the accuracy and efficiency of crude oil price forecasts published by different organisations, think tanks and companies. Since the sequence of published forecasts appears as smooth, the weak efficiency criterion is clearly violated. Even combining forecasts, cannot increase efficiency due to high correlation among various forecasts. This pattern of oil price forecasts can be attributed to combining myopia (use current oil price levels as a basis) with Hotelling‐type exponential growth. Another behavioural explanation in source of inefficiencies is that forecasters prefer to harmonise their forecasts with other forecasters in order to be not an outlier.

Levelized cost of energy from private and social perspectives: The case of improved alkaline water electrolysis

The concept of the levelized cost of energy or respectively hydrogen (LCH) is frequently chosen for techno-economic analyses of energy technologies. However, the results of the LCH very much depend on the assessment perspective, which may be either private (or synonymously business) or social. The paper identifies three points as being basically responsible for differences: (1) tax deductibility of cost components, (2) external environmental costs, and (3) discounting.The objectives of the paper are to present the levelized cost of hydrogen for improved alkaline water electrolysis (AWE) and to highlight the different results from private and social perspectives. Accordingly, the methodology comprises the different LCH calculation schemes, an energy scenario focusing on electricity, a Life Cycle Assessment for environmental impacts of AWE technology, and the monetary valuation of these impacts.As a case study, we chose the production of hydrogen from advanced alkaline water electrolysis at three different sites in Europe (Germany, Austria, and Spain). The paper shows that the private and social LCH differ strongly. Inclusion of all cost components and comparatively low discount rates provoke highest LCH from social perspective. The main differences in the case study presented here are due to full accounting for environmental costs – with the global warming potential resulting from electricity generation as the main environmental cost source – and due to electricity price projections. Finally, the paper also discusses the sensitivity of LCHs with respect to parameters such as plant lifetime, monetary values of CO2, and tax rates.