7.3. Energy Pricing

Energy prices have a key role to play both in promoting energy efficiency and in ensuring expansion of domestic supply. They promote energy efficiency by providing an economic incentive to shift to more energy efficient technologies, an objective that is helped by the various non-price actions discussed above.

Rational energy prices are also necessary to ensure expanded energy supply because otherwise energy producers will not generate the investible surpluses needed to fund the costs of exploration and production. Unfortunately, the structure of energy prices at present is very different from what it should be.