US Demand Research Articles

The prospects for liquefied natural gas development in the US

The objective of our paper is to analyze the prospects for LNG development in the US. In particular, we discuss LNG investment projects with respect to natural gas supply and demand, existing transmission infrastructure, and competing pipeline projects. At the same time potential competition between natural gas and coal in power generation is taken into account. We conclude that in the mid-term, LNG will assume an essential role in meeting US demand because of stagnating and declining domestic production in North America accompanied by an expected increase in demand for natural gas. Additional net imports will be required in the western US (mainly southern California), the Southeast, and in the Northeast—three areas of the nation that lack adequate supply. When accounting for the current status of existing natural gas infrastructure and forthcoming investments, we conclude that there should be little concern about sufficient investment incentives and supply security in the US competitive natural gas market.

A Structural Investigation of Third‐Currency Shocks to Bilateral Exchange Rates*

AbstractAn exchange rate between two currencies can be materially affected by shocks emerging from a third country. A US demand shock, for example, can affect the exchange rate between the euro and the yen. Because positive US demand shocks have a greater positive impact on Japanese interest rates than on euro area rates, the yen appreciates against the euro in response. Using quarterly data on the United States, the euro area and Japan from 1981 to 2006, this paper shows that the third‐currency effects are significant even when exchange rates evolve according to uncovered interest parity. This is because interest rates are typically set in response to output and inflation, which are in turn influenced by other exchange rates. More importantly, third‐currency effects are also transmitted to the actual exchange rate through the expected future exchange rate, which is, in a multi‐country set‐up, influenced by third‐countries' fundamentals and shocks. Third‐currency effects have a stronger impact on the currency of a relatively more open economy. The analysis implies that small open economies should avoid strict forms of bilateral exchange rate targeting, since higher trade and financial openness work as a force intrinsically amplifying currency fluctuations.

US demand for metallocene and single-site polymers is forecast to grow

Ultrahigh molecular weight polyethylene (UHMWPE) belongs to an emerging class of high-performance specialty polymers with a unique set of properties and applications. The field has witnessed many scientific and technological advances in recent years. However, synthesis of UHMWPE is not a trivial exercise and presents several challenges. This review addresses these fundamental challenges and provides an overview of recent developments in the field of UHMWPE. The nature of catalysts, reaction conditions that favor its formation, their physical properties, methods of processing them into products, and their applications are discussed. Recent developments in formation of UHMWPE in a disentangled state by use of appropriate catalysts and reaction conditions are also discussed. This has elicited considerable interest as a means of enabling melt processing of UHMWPE. This review provides a comprehensive source of information and understanding of the multifaceted aspects of UHMWPE with specific reference to chemistry, catalysis, processes for manufacturing, and an analysis of catalyst structure-polymer property relationships.

Exchange rates, global imbalances, and interdependence in East Asia

The paper analyzes East Asian interdependence in the face of global imbalances. A macro-econometric multinational model is used, describing Korea, Japan, China and the rest of East Asia in their respective relations with the United States as well as with the rest of the world. US imbalances and their expected consequences, notably a depreciation of the dollar and the slowdown of US demand, have rather contrasted effects on East Asian economies, depending on relative magnitudes of the two components. Korea is more affected by the dollar depreciation while China is more exposed to the US slowdown. Japan, less open and less dependent on the US market, is less touched. The correction of East Asian exchange-rate misalignments, which have prevailed since the beginning of the 2000s, would badly affect East Asian economies if undertaken too abruptly. Lastly, the perspective of creating an area of stabilised exchange rates between won, yen and other currencies, organized either as a common currencies basket system or in a regime based on the ACU, is explored preliminarily. Sets of simulations comparing adjustment mechanisms between East Asian countries, with or without the possibility of monetary adjustment, illustrate the cost of precluding exchange-rate adjustments in the case of asymmetric demand shocks.

Water demand, supply, and quality in the United States: sustainability of water uses

The purpose of this paper is to develop, from a very wide variety of public data, a synthesis of the status of water supply, demand, and quality for the United States from 1985 to the present, in an effort to obtain a dynamic baseline for assessing the sustainability of multiple water uses. Although the United States has relatively ample supplies of water, it is likely that deficits will occur in areas with increasing population and economic development. Variations in population, industrial, and agricultural production are driven by internal and external factors among which water probably causes the largest disruptions because of the inability to adapt to those changes. Climate changes due to global and regional warming trends also have major impacts on water availability and quality, although they are less sudden than structural changes in the economy. To help frame a baseline from which those changes can be measured to assess its sustainability for the population of the United States, we summarize the most salient findings about the status of US water supply, demand, and quality at the level of the water resource regions, and states over a period of approximately 20 years. Our synthesis of the data collected by the US agencies indicates that water quality is improving and the supply of water for the United States is generally good. However, shortages of water predicted from linear extrapolations of past trends, appear principally to affect the western water resource regions. Using US Census Bureau ‘high population’ forecasts, water shortages may be felt earlier and in more water resource regions than previously expected. These conclusions implicitly take into account changes in the US economy during the mid-eighties but do not account for: regional-scale climate, legal low-flow requirements, or other non-routine occurrences.

Monetary and Real Shocks, the Business Cycle and the Value of the Euro

The appreciation of the dollar in the aftermath of the launch of the euro came as a surprise to most observers; furthermore, traditional models do not seem to be able to capture the fluctuations of the dollar/euro exchange rate. Is this a confirmation of earlier research according to which no structural model can explain exchange rate dynamics? More optimistically, this study shows that a structural VAR model of the Mundell-Fleming type well explains the behaviour of the euro and its relationships with the fundamentals. Our estimates indicate that the dollar appreciation is primarily due to the cyclical strength of US demand. By contrast, they do not support the often-voiced theory that the appreciation of the dollar is explained by the new economy. Finally, the model shows that monetary shocks have limited effects on the exchange rate and very strong ones on inflation.

Retailer entry conditions and wholesaler conduct: The theatrical distribution of motion pictures

I add to the empirical literature on vertical contracting and wholesaler conduct by using retailer entry conditions to infer unobserved choice variables and equilibrium responses to prices and advertising. After estimating the US demand for theatrical motion pictures from 1990–96, I apply these techniques to compare observed outcomes to predictions under various distributor-conduct hypotheses. While several caveats apply, results indicate that the hypothesis of competition among distributors fails to describe advertising levels or aggregate payments of theaters to studios. The hypothesis of some collusion among distributors, however, matches the data fairly well.

Causes of Growth and Decline in Mexico’s Maquiladora Apparel Sector

Under the North American Free Trade Agreement (NAFTA) beginning in 1994, the maquiladora sector was the dynamic manufacturing sector in Mexico, and its apparel subsector was especially so, more than quadrupling in employment from December 1993 to July 2000. Yet NAFTA’s influence on apparel employment is hard to find in a careful time series econometric analysis. Instead, much of employment growth is explained for 1980 to the present by changes in US demand as measured by real US gross domestic product or by real US apparel spending, by US/Mexico relative labor cost as proxied by the real peso‐dollar exchange rate, and by the relaxation of quotas on US apparel imports from Mexico in 1988–1990. In equations including these variables, tests for a structural break at the time of NAFTA find an effect which is either insignificant or else quite small and in some models negative. Possible explanations for this surprising result are discussed, along with the implications for cost–benefit analysis of free trade agreements.

Landscapes of Risk

Several hurricanes and industrial explosions in 2005 brought increasing public attention to the risk inherent in the location of US petrochemical facilities. The upper Texas Gulf Coast is home to a significant cluster of petrochemical industries including some of the largest refineries in the United States. Residents live, play and work in the shadow of petrochemical towers. While the petrochemical industries have brought jobs and economic development to the area, they have permanently changed the landscape and been linked to increased stress and illness for local residents. Nevertheless, the US demand for their products means that these industries will continue to pose ongoing risks for citizens that live near them. Our photo essay intends to provide insight into these particularly important and complex landscapes of risk—landscapes in which the natural environment and well-being of residents is largely ignored as fuel prices and energy security are debated.

US decarbonization options

The quest to reduce reliance on energy generating technologies releasing global warming pollutants such as carbon dioxide and methane has been a target of concern across the world. An analysis of a map of actions leading to decarbonization in the US has recently been described. Carbon rich fossil fuels are 85% of the United States energy sources. This new analysis identifies concentrated solar thermal energy, nuclear energy, geothermal and hydrothermal energy, wind, solar cells, and biomass as candidate alternative energy sources. Over the last twenty years, concentrated solar thermal technology has been demonstrated in a 354 MW plant located in the Mojave Desert. Nuclear energy deserves to be aggressively reevaluated in the context of current energy needs but significant issues such as reprocessing and storage of waste loom as major detracting elements. Nuclear energy currently accounts for 40% of the US electricity requirements. The contribution of wind and geothermal/hydrothermal energy is expected to be limited. Solar cells are limited by storage capacity and the time of daily solar radiance useful to the technology. Biomass has promising prospects but will not be able to completely replace petrochemical fuel stock to meet transportation demands. Prospects of hydrogen production derived from biomass are significantly limited when considering the available conversion technology. This analysis makes a case that alternative energy sources could replace 70% of the US demand for fossil fuels at a cost of $200 billion per year. (Science 2006, 313: 1234–1244)

The United States and the Middle East: interdependence not independence

AbstractFor a long time, the US policymakers have called for restrain over the country's high rate of oil consumption, as well as reducing its dependence on imported oil from the Middle East. It is against this backdrop that this study examines America's efforts to articulate a comprehensive long‐term energy policy to address, among other things, these concerns. In doing so, the study began by analysing the US Energy Policy Act of 2005, (Public law 109–58) given particular attention to the Strategic Petroleum Reserve, Arctic National Wildlife Refuge and the Gulf of Mexico. The paper also discusses energy cooperation between the US and two Middle Eastern OPEC producers ‐ Saudi Arabia and Libya. The paper attempts to put up a three‐fold argument: that US heavy dependence on oil is likely to continue; that production from OPEC Members, particularly from Middle East, will meet the growing US and global oil demand, and that unilateral approach to energy issues will not succeed, but an inclusive approach to promote cooperation between producers and consumers to best serve the interests of all players and enhance global economic prosperity.

Exploiting the cointegration properties of the US soy-based market system

Abstract Perhaps for the first time, this paper applies Johansen and Juselius’ methods of the cointegrated vector autoregression (VAR) model to a monthly US system of markets for soybeans, soy meal, and soy oil. Analysis of the error correction or cointegration space illuminates the empirical nature of policy-relevant market elasticities, and of effects of important policy, market, and institutional events on US soy-related markets. A statistically strong US demand for soybeans emerged as the primary cointegrating relation in the error-correction space.

China in the New World Order

China is one of the leading manufacturers in the world and more businesses are outsourcing their manufacturing to China. China is reducing its dependence on foreign oil by more building nuclear power plants and developing wind generation for electricity. Its political system, both market and planned, allow it to avoid global economic fluctuations and experience rapid growth rates. With the free trade agreement China has signed with the ASEAN countries the Southeast Asia economies should flourish while at the same time the US and EU demand more goods from China.

Micropayments – an opportunity to push US demand?

Despite their prevalence in electronic transactions across the world, smart cards remain the redheaded stepchildren of the US card market. Forgetting for a moment about SIM cards, smart chips in consumer spending cards have been limited in their potential. By year-end, the loftiest estimates of the US contactless smart card market suggest that consumers will hold 8 million RFID enabled cards by 2005. This would represent a penetration rate of less than one percent in a market with over one billion issued credit and debit cards. However, we can find hope in the fact that this initial foray into contactless is only the start of something larger. The US market is beginning to see value in all things small, such as micropayments, which will help drive market adoption of smart cards.

Bombs, hurricanes and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'. The oil market's roller‐coaster continued into July with rising prices for US gasoline ahead of the 4th July holiday and a jump in prices for WTI on fears of hurricane damage to US Gulf production. August Nymex gasoline settled at a record $1.8056/gall on the 7th July as figures were released showing US demand at record weekly levels. On the same date, a series of fatal terrorist bomb attacks in London propelled IPE Brent to its highest‐ever level of $60.70/bbl whilst, in Asia, Dubai traded at an all‐time high of $55.80/bbl. The market's strength rapidly proved to be evanescent. Within hours of the London bombings, Brent had given up $5.00/bbl. Crude oil and gasoline prices eased in subsequent days and middle distillate lost some of its recent strength relative to gasoline as US stock figures showed a steady improvement in inventory levels. Volatility returned towards the end of the month on worries about gasoline shortages in both the US and Europe and more price records fell on 1st August on news of the death of King Fahd of Saudi Arabia. WTI gained $1.00 on the day, settling at a record $61.57/bbl on Nymex, having been even higher during the day's trading, at $62.30/bbl. On the IPE in London, Brent rose to its highest‐ever intra‐day level of $60.98/bbl, before settling slightly lower. Some product prices also went into previously uncharted territory: notably jet fuel in North West Europe, which went above $600/t.

The presidential election in Croatia, January 2005

The article analyzes the presidential election in Croatia in 2005. The article also explains why Mesic was reelected. During his first term in office, Croatia broke out of the international isolation of Tuđman’s presidency (1990-1999), for which Mesic should get the most credit. Further, whilst in office, Mesic showed resoluteness: he rejected a US demand to send Croatian soldiers to Iraq and he refused to sign that Croatia would not extradite American soldiers to the International Court for War Crimes. Again, Croatia’s GDP per capita growth increased during his presidency and the standard of living also improved. Finally, Mesic´ had the most credible electoral campaign. He was also the only one among the candidates who showed a sense of humor, and his campaign was more relaxed and interesting than the campaigns of the other candidates.

Presidential Candidates Speak Out on Science Policies

Presidential Candidates Speak Out on Science Policies

Modelling US tourism demand for European destinations

An almost ideal demand system model is used to examine US demand for tourism in European destinations. The model provides policy makers with useful information concerning the sensitivity of tourism demand to changes in relative prices, exchange rates and expenditure. The results show that price competitiveness is important for US demand for France, Italy and Spain but is relatively unimportant for the UK. France and Italy are regarded as substitutes by US tourists, as are Spain and Italy. As US expenditure rises, the market shares of Spain and the UK decline, while France and Italy benefit. The demand modelling and forecasting indicate that in the absence of a tourism price index, the choice between alternative price indices does not have a significant effect on the results.

US demand for reinforced plastics set to rise 2.5%/year

US demand for reinforced plastics set to rise 2.5%/year

Shock monetari e reali, ciclo economico e valore dell’euro (Monetary and Real Shocks, the Business Cycle and the Value of the Euro)

The appreciation of the dollar in the aftermath of the euro launch came as a surprise to most observers; furthermore, the traditional models fail to capture its dynamics. Is this a confirmation of Mussa's, Meese's and Rogoff's results, according to which no structural model can perform better than a random walk? More optimistically, this study shows that a structural VAR model of the Mundell-Fleming type satisfactorily explains the behaviour of the euro and its relationships with the fundamentals. My estimates indicate that dollar appreciation is primarily due to the cyclical strength of US demand. By contrast, they do not support the often-voiced theory that dollar appreciation is to be accounted for with the "new economy." Finally, the model shows that monetary shocks have limited effects on the exchange rate and very strong effects on inflation. This justifies the emphasis placed by central banks on the pursuit of internal objectives rather than exchange rate stability. JEL Codes: E31, E32, E58, F31, F33 Keywords: Business Cycle, Cycle, Monetary