Abstract
The high dependency on fossil fuels, fluctuations in prices and supply have macro/micro-economics effects for both energy exporters and importers. Therefore, understanding economic stability based on energy market changes is an important subject for policymakers and researchers. Norway, as a fossil fuel exporting country, is a good choice for the analysis of the relationships between economic robustness and fossil fuel economic fluctuations. While the country is one of the pioneers in the field of sustainable energy utilization, they have tried to provide a robust economic environment for oil export revenues. In this chapter, the impacts of energy changes on the economy are investigated in Norway. In this regard, first, the impact of oil prices on macro-economic parameters is discussed. Afterwards, the main issues related to energy economics including resilience of the energy sector, energy policies, economics analysis of the energy sector, and the electricity markets are discussed.
TopBackground
Many empirical studies have investigated the relationship between oil price fluctuations and macroeconomic activity. Moreover, the importance of taking the two-way causality into account with regard to international shocks is strongly emphasized (Baumeister & Peersman, 2013; Kilian, 2009; Kilian & Murphy, 2012). (Kilian, 2009) and (Kilian & Murphy, 2012) demonstrated that oil demand volatility was the most significant factor in oil price fluctuations throughout the 1974–2009 period. (Esfahani, Mohaddes, & Pesaran, 2014) explained the direct effects of oil price shocks on domestic production for 9 major oil exporters, without considering the variance effects of demand on oil price shocks.
According to research, macroeconomic parameters can be affected by oil price shocks. In this context, similar results were obtained in several Asian countries and indicated that oil price fluctuations have an effect on economic growth (Cunado & Perez de Gracia, 2005; Du, Yanan, & Wei, 2010; Hanabusa, 2009; Jayaraman & Choong, 2009; Rafiq, Salim, & Bloch, 2009). Also, the impact of an oil price shock on exchange rates has been observed in both developed and developing countries (Narayan, Narayan, & Prasad, 2008; Ozturk, Feridun, & Kalyoncu, 2008; Rautava, 2004; Shehu Usman Rano Aliyu, 2009). Some current researches have modeled a system of demand and supply in global oil markets by using DSGE models. They have considered the fluctuations in macroeconomic variables in response to oil shocks while taking into account oil importers mostly the U.S. economy. (Bodenstein & Guerrieri, 2011; Nakov & Pescatori, 2010; Peersman & Stevens, 2013). Nobili (Lippi & Nobili, 2012) analyzed the unstable correlation between oil prices and the US economic activity which revealed that the supply shocks in the global economy have a greater effect on oil price fluctuations than canonical oil supply shocks.
Key Terms in this Chapter
Gassnova: Gassnova SF is the Norwegian state enterprise for carbon capture and storage. Gassnova stimulates technology research, development and demonstration and contributes to the realization of technology in industrial, full-scale pioneer plants.
RENERGIX: The RENERGIX program is designed to provide support for the long-term, sustainable restructuring of the energy system in order to accommodate a greater supply of new renewable energy, improve efficiency and flexibility, and facilitate closer energy integration with Europe, with due consideration given to environmental perspectives.
Energi21: Energi21 is the Norwegian national strategy for research, development, demonstration, and commercialization of new energy technology. It is the Ministry of Petroleum and Energy’s permanent strategic body for research, development and demonstration in the energy sector.
GDP: GDP is the total value of everything produced by all the people and companies in the country. It doesn't matter if they are citizens or foreign-owned companies. If they are located within the country's boundaries, the government counts their production as GDP.
OG21: Norway's technology strategy for the petroleum sector (OG21) was established in 2001 to identify technology priorities for efficient and environmentally responsible petroleum activities on the Norwegian continental shelf.
Enova: Enova SF is owned by the Norwegian Ministry of Petroleum and Energy and contributes to reduced greenhouse gas emissions, development of energy and climate technology and a strengthened security of supply.