the cost of production will rise as it becomes necessary to mine deeper veins and provide the expected environmental and human safeguards. Regarding oil, increased scarcity will no doubt raise relati ve prices. In fact, new oil-fired capability may not be installed by 1995. The second projection has been adapted from the work of E.A. Hudson and D.W. Jorgenson which is highly regarded in the economic energy literature.These estimates were derived from their analysis of a scenario in which the government does not intervene with respect to energy prices. Their analysis does not, however, extend to the timeframe covered by this study. The third projection has been derived from the Hudson- Jorgenson scenario in which the U.S. Government levies a "BTU" 2 tax to encourage fuel conservation. Based upon projections of the Hudson-Jorgenson estimates of relative price changes to the year 2025, a coal-fired plant may generate electric power at an average price of 25.1 mills/kwh over the period 1995-2025. Were a vigorous policy of energy conservation pursued, the average generation price may be about 33 mills/kwh. 1 E.A. Hudson, and D.W. Jorgenson, "U.S. Energy Policy and Economic Growth, 1975-2000", The Bell Journal of Economics and Management Science, Vol. 5, No. 2, Autumn 1974. o It is to be stressed that the five percent value is not that of Hudson and Jorgenson. It is our projection of the constant dollar impact estimated in their analysis.
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