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The Cost of Natural Gas Shortages in Ireland. ESRI WP397. July 2010

Leahy, Eimear and Devitt, Conor and Lyons, Sean and Tol, Richard S.J. (2010) The Cost of Natural Gas Shortages in Ireland. ESRI WP397. July 2010. [Working Paper]

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    Abstract

    This paper investigates the economic implications of disruptions of one to ninety days to the supply of natural gas in Ireland. We assess the impact of a hypothetical gas supply disruption in both winter and summer in 2008 (with observed market characteristics) and in 2020 (with projected market characteristics). The cost of a natural gas outage includes the cost of natural gas being unavailable for heating and other purposes in the industrial and commercial sectors, lost consumer surplus in the residential sector, the cost of lost electricity in all sectors and lost VAT on the sale of gas and electricity. Ireland produces much of its electricity from natural gas and the loss of this electricity accounts for the majority of the cost of a natural gas outage. Losing gas-fired electricity would cost 0.1 to 1.0 billion euro per day, depending on the time of week, the time of year, and rationing of electricity. Industry should be rationed before households to minimize economic losses, but current emergency protocols favour industry. If gas-fired electricity is unavailable for three months, the economic loss could be up to 80 billion euro, about half of Gross Domestic Product. Losing gas for heating too would add up to approximately 8 billion euro in economic losses. We also discuss some options to increase Ireland’s security of supply, and find that the cost is a small fraction of the avoided maximum damage.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > energy policy (Including international arena)
    Countries > Ireland
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 20 Jun 2017 09:17
    Number of Pages: 38
    Last Modified: 24 Sep 2018 13:35
    URI: http://aei.pitt.edu/id/eprint/87936

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