# International Futures Help System

## Energy Equations Supply

The computation of energy production (ENP) is considerably easier than that of gross sectoral production in the economic model or of agricultural production in the agricultural model. Only capital is important as a factor of production (not labor, land, or even weather). Energy production is the quotient of capital in each energy category (KEN) and the appropriate capital-to-output ratio (QE). The model user can modify a multiplier to this ratio (QEM) to represent changes in technology. The capital-to-output ratio is itself a function of resource availability (see Energy Equations Resources). Known reserves (RESER) pose a direct constraint on production, however. Specifically, the reserve-to-production ratio may not fall below a specified factor (PRODTF). In the case of oil and gas, for example, no more than about 10% of known reserves can be produced in a given year. (This is similar to the assumption of the Stanford Pilot Model, Stanford University, 1978). Within the reserve constraint, the user can force increases or decreases in production via an energy production multiplier (ENPM). A capacity utilization factor (CPUTF) also affects the production level.

The real dynamics of supply in IFs occur in energy investment, to be discussed below. In representing investment dynamics IFs differs from most energy models; the approach here is similar to that of Naill (1977).

Once production is computed it is possible to compute a world average price (WEP), weighted by energy production (ENP) in each category and each region.