The first oil price shock in 1973-4 and the second oil price shock in 1979-80 introduced, at least into the Western industrial countries, least-cost concepts for finding the optimal mix of energy with other factors of production. One result of this microeconomic paradigm of energy use is the mounting evidence that current energy systems do not meet the criteria of cost-effectiveness. Another result is the policy recommendation that, even at current energy prices, marginal investment efforts concentrate on improving the end-use delivery of services rather than investing in new generation technologies. This concept of integrated resource planning (IRP) has been gaining increased attention in efforts to restructure the current energy systems.
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