Abstract
Energy is a vital element for the economy as a whole as every sector demands its usage constantly. It is not an end-product by itself, but a pre-requisite for most of the economic activities. A sudden increase in energy prices or a disruption of supply can entail heavy economic repercussions. An example of an economic repercussion due to energy fluctuations was the breakout of the oil crisis in the mid-70s. The effects of this economic disruption has ensured that the worldwide energy policies be implemented in a disciplined manner. With this patterned implementation of policies specifically for each country, energy supply will be secured. Further, energy price fluctuations will be controlled. It has been observed that various types of data influence energy choices. This data or information could be on the availability of energy sources, security of supply, cost, ease of handling, technology, public opinion, and environmental and political issues. We will focus on the production of electricity which is expected to be the fastest growing energy sector in the world. On an estimate, it has been recorded that energy production has increased by 1,6% and will continue to rise at this alarming rate annually until 2030. A case study on electricity is particularly interesting as its production can be achieved using a large panel of easily interchangeable energy sources. For example, government and electricity producers are free to choose between numerous sources to produce energy, whereas the airlines have no choice but to use kerosene. Electricity production thus seems an accurate and appropriate indicator of economic, political and natural constraints encountered by agents in this market.
