Albert L. Danielsen

My Years in Academia

I have written many papers, articles and books on energy economics and events. The first years were devoted to research related to oil markets and cartel behavior. Refereed articles like “Cartel Rivalry and with World Price of Oil” (1976), “The Role of Speculation in the Oil Price Ratchet Process” (1979) and “The Theory and Measurement of OPEC Stability” (1980) were written for professional economists. This work culminated in The Evolution of OPEC (1982), which was written for students with limited exposure to the principles of economics. The goal of the articles was purely scientific- to know, to understand and nothing more - while the Evolution of OPEC book was designed to inform rather than persuade students. None of this work was policy oriented or prescriptive (i.e., it was positive rather than normative). All energy resources compete with others on the margin so knowing something about OPEC is helpful if not essential to understanding all other energy markets.

Investigating oil markets led naturally to examining natural gas, coal, nuclear, hydro and electric markets. Alternatives like wind and solar were not in play during the 1970s and biofuels were byproducts in a few industries. Producing, processing, distributing and using each of these resources and their end products is extremely complex. In most countries natural gas and electric companies were state-owned monopolies or regulated by government agencies as in the United States. Privatization and restructuring began in earnest in the 1980s and continues to this day. State-owned and private companies have always worked behind the scenes to protect their environment. No one wants to “foul their own nest” for the simple reason it is costly. Companies go to extraordinary lengths to prevent oil spills, gas leaks and nuclear accidents. However, harmful residues and byproducts are part and parcel to producing and using an energy resource. Thus, public involvement is generally considered desirable and in any case it is what it is.

Methodology

Most of my writing continued to be positive rather than normative but most literature related to public ownership and control is normative. Thus, after writing mostly about the “world as it is” or at least “as I perceived it to be”, I have focused increasingly on how various segments of the “world as it ought to be” and/or how best to achieve goals desired by legislators, regulators and special interest groups. For example, “An Analysis of Oil Price Legislation and Regulation in the United States” (1979) described the harmful effects of price regulation and argued for deregulation. Similarly, the “solutions” segment of “World Oil Price Increases: Sources and Solutions” (1980) was policy oriented and prescriptive. All of my consulting work beginning around 1980 involved goal-oriented research, writing and oral advice and testimony for public and private advocates.

My foray into normative economics continued while collaborating with David Kamerschen on a range of research and consulting projects. One important result of our collaboration was revising James C. Bonbright’s Principles of Public Utility Rates (1961). Bonbright had succinctly presented the principles regulators should use when setting limits and bands on prices and profits of public utilities. Regulation involves legal, financial, accounting and indeed all business and political disciplines so revising the Principles book was a very broadening experience. People involved in the regulatory process – lawyers, accountants, financial analysts, regulators and legislators often refer to this book but it is too specialized for a general audience.

Most of my research and writing since 1990 has been normative and goal-directed. For example, the series of articles “Seven Myths of Real-Time Pricing”, "Customer Response To Real-Time Pricing” and “Real -Time Pricing: Ready for the Meter?” published with Nainish Gupta show how electric companies can lower capital costs and average electric prices by implementing pricing systems that track their costs in real time. Proprietary projects since retiring from teaching in 1996 have (hopefully) helped clients achieve their goals.