• Primary Program Economics of Energy Systems
  • Research Interests Energy markets, energy regulation, computing economic equilibria

Biography

Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He was a visiting researcher fellow at KAPSARC where he is participating in the development of energy models and writing policy analyses in a range of areas, including domestic energy use in Saudi Arabia, market power in world oil markets, designing and managing income stabilization funds, and China’s and India’s energy economies. He works mainly in the area of energy-market forecasting and energy policy analysis.

Prior to joining Temple, he was at the Energy Information Administration (EIA) of the U.S. Department of Energy and its predecessor, the Federal Energy Administration, where he headed the group that did the economic impact analyses of the bills and laws passed during the Carter administration and developed and ran the forecasting models then used for policy analyses and the forecasts in the EIA Annual Report. He has authored over 100 refereed articles. In one study he was ranked in the 20 most published researchers in his field over a fifty-year span. He was the editor in chief of the journal Interfaces, an area editor for Operations Research, and the Informs Journal on computing, and the Vice President of Publications for INFORMS and its predecessor society, Operations Research Society of America. He has been involved in studying local economic policy issues, including advising the Tax Reform Commission of the City of Philadelphia, estimating the impact on jobs of building casinos in Philadelphia, and political redistricting. He also did a queueing study oil tank vessels on the Delaware River.

Publications

See all Frederic’s publications
  • Discussion papers
  • Methodology paper
  • KAPSARC journal articles
  • External journal articles
The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

Countries in the Gulf Cooperation Council (GCC) have installed a network of high-voltage transmission lines, known as the GCC Interconnector, which links the member states of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE). The Interconnector has successfully provided reliable services to GCC countries but has not yet realized its full potential as a platform to fully integrate individual electricity systems. This paper analyzes the potential costs and gains of electricity exchange among the GCC countries. Given the current political climate, it does not consider electricity exchange with Qatar, except as a sensitivity case.

June 10, 2018
The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

Despite significant progress made by China in liberalizing its natural gas market, certain key areas such as market access and pricing mechanisms remain heavily monopolized or controlled by the government. To assess how such distortions impact the market, we developed a Mixed Complementarity Problem model of China’s natural gas supply industry, calibrated to 2015 data.

May 24, 2018
Managing Oil Revenue Stabilization Funds: A Framework for Developing Policies

Managing Oil Revenue Stabilization Funds: A Framework for Developing Policies

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way that Saudi government deposits and reserve at the Saudi Arabian Monetary Authority (SAMA) have historically served as a buffer to decouple government budget from oil revenue fluctuations. By contrast, sovereign wealth funds create income for future generations to replace revenue streams from depletable resources – one of the purposes of Saudi Arabia’s Public Investment Fund. We developed a framework for optimizing policies for adding to and withdrawing from stabilization funds, which we apply to Saudi Arabia as a case study based on publicly available data. The quantitative results are sensitive to the specific assumptions on the likelihood of particular oil prices arising but the overall results are robust to a wide range of assumptions.

October 4, 2017
Potential Gains From Reforming Price Caps in China’s Power Sector

Potential Gains From Reforming Price Caps in China’s Power Sector

When energy sectors transition from government-controlled to market-driven systems, the legacy regulatory instruments can create unintended market distortions and lead to higher costs. In China, the most notable regulatory throwback is ceilings on electricity prices that generators can charge utilities, which are specified by plant type and region. We built a mixed complementarity model calibrated to 2012 data to examine the impact of these price caps on the electricity and coal sectors.

September 29, 2016
Can Adoption of Rooftop Solar PV Panels Trigger a Utility Death Spiral?

Can Adoption of Rooftop Solar PV Panels Trigger a Utility Death Spiral?

The growing penetration of distributed energy resources (DER) such as solar and wind power is causing major changes in the electricity market. One key concern is that existing tariffs incentivize ‘free riding’ behavior by households, which leads to a cycle of rising electricity prices and DER adoption, thereby eroding utility revenues and start a death spiral. We developed a model using data from two cities in the U.S. to explore this issue.

May 15, 2016
Economic Impacts of Debottlenecking Congestion in the Chinese Coal Supply Chain

Economic Impacts of Debottlenecking Congestion in the Chinese Coal Supply Chain

China’s coal industry grew at unprecedented rates during the first decade of the 2000s in order to support equally unprecedented economic growth. In that type of environment, it is impossible for the capacities of every link in the supply chain to be correctly sized all the time. In order to understand the consequences of such mismatches, KAPSARC has developed a production and multi modal transshipment model of China’s domestic coal market, calibrated to 2011 data. This allows us to examine what the global and domestic consequences might have been had the bottlenecks not existed in 2011.

September 7, 2015
Asian Premium or North Atlantic Discount: Does Geographical Diversification in Oil Trade Always Impose Costs?

Asian Premium or North Atlantic Discount: Does Geographical Diversification in Oil Trade Always Impose Costs?

It is popularly believed that importers of oil diversify their suppliers to achieve security of supply and that exporters diversify their customer base to achieve security of demand. However, this diversification comes at a cost, compared with buying from or selling to the most economically attractive counterparties— analogous to paying an insurance premium. In fact, our research suggests that this illustration may not properly describe the outcomes for large individual producers or consumers (or coalitions of these) and that diversification can also be a strategy for revenue maximization or cost minimization. We have developed KAPSARC’s Global Oil Trade Model (GOTM), which is calibrated to the configuration of the global oil markets in 2012, to demonstrate our framework. Our model shows that, in 2012, the volumes of supply and demand and the trade flows constrain the valid candidates to combine diversification with economic gain. Only the trading pair of the Arabian Gulf exporters and North East Asian importers can benefit. This is the illustration that we develop in this paper. However, a future reconfiguration of crude flows—perhaps with growth in North American exports to the Pacific or a major pivot by Russia to sell material volumes to China and other North East Asian customers—could introduce new players. KAPSARC’s framework may prove valuable to understanding potential future dislocations in crude oil trade flows.

August 6, 2015
Efficient Industrial Energy Use: The First Step in Transitioning Saudi Arabia’s Energy Mix

Efficient Industrial Energy Use: The First Step in Transitioning Saudi Arabia’s Energy Mix

External observers worry about whether Saudi domestic consumption of oil will crowd out exports. This is based on simple extrapolations which suggest that in a little more than 20 years Saudi Arabia may become a net importer of hydrocarbon fuels. However, our research does not support this. Based on the “baseline scenario” macroeconomic assumptions in Oxford Economics’ global economic and industry models, we project Saudi Arabia’s energy balances until 2032 using the KAPSARC Energy Model (KEM).

June 7, 2015
Why build energy models as MCPs? An economic perspective

Why build energy models as MCPs? An economic perspective

The discipline of microeconomics focuses on the outcomes of the actions of economic agents, where economic agents can be individuals as producers and consumers or organizations that deliver goods or services. Microeconomists have developed a collection of models to understand and represent these behaviors. Mixed Complementarity Problems (MCPs) are among the most recent such models. This paper addresses the community of energy economists who are not necessarily focused on modeling but want to know more about current methods for representing economic equilibria. We describe in non-mathematical terms the advantages of using MCPs over other representations of markets and how to decide when they should be preferred to a more traditional (and possibly simpler) optimization approach such as linear programming.

January 6, 2015
Lowering Saudi Arabia’s fuel consumption and energy system costs without increasing end consumer prices

Lowering Saudi Arabia’s fuel consumption and energy system costs without increasing end consumer prices

Saudi Arabia aims to reduce the growth of its energy demand. This paper outlines an approach that could help the country to reduce substantively its current fuel consumption and could result in a net economic gain without increasing current end consumer prices and while maintaining positive utility sector net cash flows. Using a new multi-sector equilibrium model developed by KAPSARC (the KAPSARC Energy Model or KEM), we estimate the magnitudes of the potential economic gains that different policies would generate. Our long term static version of the model reveals that an annual economic gain exceeding 23 billion USD in 2011, or almost 5% of that year’s GDP, could have been achieved while the water and power sectors continue to live within their cash flows. Our approach—which introduces investment credits for solar and nuclear and allows more natural gas consumption in the power sector—achieves almost all the benefit of raising inter-sector transfer prices for fuels to world market equivalences, but only moderately increases current transfer prices. Importantly, this gain does not require an increase in consumer prices of electricity or water.

March 7, 2014
Implementing Alternative Pricing Policies in Economic Equilibrium Models Using the Extended Mathematical Programming Framework

Implementing Alternative Pricing Policies in Economic Equilibrium Models Using the Extended Mathematical Programming Framework

Standard economic optimization models represent markets in perfect competition. They are commonly used, though they may not accurately represent real-world policies and regulations. Equilibrium models built using a mixed complementarity problem (MCP) approach are capable of simulating more flexible pricing structures, including regulated prices. This approach can provide a more accurate representation of real-world economic systems. However, it is significantly more difficult to develop and requires more complex formulations, as well as advanced skill sets.

March 12, 2020
A Dynamic Nash Game Model of Oil Market Disruptions and Strategic Stockpiling

A Dynamic Nash Game Model of Oil Market Disruptions and Strategic Stockpiling

Operations Research

1989
Modeling and Forecasting Energy Markets with the Intermediate Future Forecasting System

Modeling and Forecasting Energy Markets with the Intermediate Future Forecasting System

Operations Research

1988
Equation Partitioning Techniques for Solving Partial Equilibrium Models

Equation Partitioning Techniques for Solving Partial Equilibrium Models

European Journal of Operations Research

1987
Computer-assisted Formulation of Linear Programs

Computer-assisted Formulation of Linear Programs

IMA Journal of Management Mathematics

1987
Understanding the Future of United States Electricity Markets

Understanding the Future of United States Electricity Markets

Energy Policy

1987
Using Dynamic Programming for Aggregating Cuts in a Single Drillhole

Using Dynamic Programming for Aggregating Cuts in a Single Drillhole

International Journal of Surface Mining

1987
Mathematical Analysis of the Interactions between Oligopolistic Players and a Competitive Fringe

Mathematical Analysis of the Interactions between Oligopolistic Players and a Competitive Fringe

American Journal of Mathematical and Management Sciences

1987
A Nash Model of Consuming Nations’ Strategic Petroleum Reserves

A Nash Model of Consuming Nations’ Strategic Petroleum Reserves

Management Science

1987
Electric Utility Expansion Planning in the Presence of Existing Capacity: A Nondifferentiable Convex Programming Approach

Electric Utility Expansion Planning in the Presence of Existing Capacity: A Nondifferentiable Convex Programming Approach

Computers and Operations Research

1987
Using dynamic programming for aggregating cuts in a single drillhole

Using dynamic programming for aggregating cuts in a single drillhole

International Journal of Surface Mining Reclamation and Environment:35-40

1986
A Conceptual View of Model Assessment in the Context of Policy Analysis

A Conceptual View of Model Assessment in the Context of Policy Analysis

OMEGA

1986
An Intelligent System for Formulating Mathematical Programs

An Intelligent System for Formulating Mathematical Programs

Decision Support Systems

1986
End Effects in Capacity Expansion Models with Finite Horizons

End Effects in Capacity Expansion Models with Finite Horizons

Naval Research Logistics Quarterly

1986
An Integrated Analysis of U. S. Oil Security Policies

An Integrated Analysis of U. S. Oil Security Policies

Energy Journal

1986
International Cooperation in Tariffs and Stockpiles for Coping with Oil Supply Disruptions

International Cooperation in Tariffs and Stockpiles for Coping with Oil Supply Disruptions

Journal of Policy Modeling

1985
Computing Regulated Market Equilibria with Mathematical Programming

Computing Regulated Market Equilibria with Mathematical Programming

Operations Research

1985
The Replication of Multi‑year Solutions Using Single Period Models of Electric Utility Capacity Expansion Planning

The Replication of Multi‑year Solutions Using Single Period Models of Electric Utility Capacity Expansion Planning

IIE Transactions

1985
A Class of Stochastic Mathematical Programs with Correlated Scale Parameters in the Objective Function and Right‑Hand Side

A Class of Stochastic Mathematical Programs with Correlated Scale Parameters in the Objective Function and Right‑Hand Side

Operations Research

1984
The Capital Supply Curve in Capacity Expansion Models: Some Economic and Algorithmic Aspects

The Capital Supply Curve in Capacity Expansion Models: Some Economic and Algorithmic Aspects

Naval Research Logistics Quarterly

1984
The Outer Continental Shelf (OCS) Oil and Gas Supply Model of the Energy Information Administration

The Outer Continental Shelf (OCS) Oil and Gas Supply Model of the Energy Information Administration

European Journal of Operations Research

1984
Intertemporal Allocation of Capital Costs in Electric Utility Capacity Expansion Planning under Uncertainty

Intertemporal Allocation of Capital Costs in Electric Utility Capacity Expansion Planning under Uncertainty

Management Science

1984
Stackelberg‑Nash‑Cournot Equilibria: Characterizations and Computations

Stackelberg‑Nash‑Cournot Equilibria: Characterizations and Computations

Operations Research

1983
Net Effects of Government Intervention in Energy Markets

Net Effects of Government Intervention in Energy Markets

The Energy Journal

1983
Optimal Output of the Averch‑Johnson Model

Optimal Output of the Averch‑Johnson Model

Atlantic Economic Journal

1982
Linear Programming Based Analysis of Marginal Cost Pricing in Electric Utility Capacity Expansion

Linear Programming Based Analysis of Marginal Cost Pricing in Electric Utility Capacity Expansion

European Journal of Operations Research

1982
Estimating Operational Costs in an Electric Utility

Estimating Operational Costs in an Electric Utility

Omega

1982
A Mathematical Programming Approach for Determining Oligopolistic Equilibrium

A Mathematical Programming Approach for Determining Oligopolistic Equilibrium

Mathematical Programming

1982
The Averch‑Johnson Model with Leontief Production Functions

The Averch‑Johnson Model with Leontief Production Functions

Energy Economics

1982
Electric Utility Capacity Expansion Planning with Uncertain Load Forecasts

Electric Utility Capacity Expansion Planning with Uncertain Load Forecasts

AIIE Transactions

1982
Modeling Natural Gas Regulatory Proposals Using the Project Independence Evaluation System

Modeling Natural Gas Regulatory Proposals Using the Project Independence Evaluation System

Operations Research

1981
Modeling the National Energy Plan

Modeling the National Energy Plan

Operational Research Quarterly

1980
Sensitivity Analysis of the Costs in the Dynamic Lot Size Model

Sensitivity Analysis of the Costs in the Dynamic Lot Size Model

AIIE Transactions

1979
Multiproduct Lot‑Size Scheduling with Proportional Product Demands

Multiproduct Lot‑Size Scheduling with Proportional Product Demands

Naval Research Logistics Quarterly

1979
A Mathematical Programming Approach to the Scheduling of Check Sorting Operations

A Mathematical Programming Approach to the Scheduling of Check Sorting Operations

Naval Research Logistics Quarterly

1978
A Dynamic Programming Algorithm for Check Sorting

A Dynamic Programming Algorithm for Check Sorting

Management Science

1977
Improved Convergence Rate Results for a Class of Exponential Penalty Functions

Improved Convergence Rate Results for a Class of Exponential Penalty Functions

Naval Research Logistics Quarterly

1976
A Class of Exponential Penalty Functions

A Class of Exponential Penalty Functions

S.I.A.M. Journal of Control

1974
On Measuring Economic Interrelatedness

On Measuring Economic Interrelatedness

Review of Economic Studies

1974
A Column Generation Algorithm for Nonlinear Programming

A Column Generation Algorithm for Nonlinear Programming

Mathematical Programming

1973
Column Dropping Procedures for the Generalized Programming Algorithm

Column Dropping Procedures for the Generalized Programming Algorithm

Management Science

1973

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