The Cost of Output in the Energy Industry in Russia During Integration Processes in Eurasia

The cost of output in the energy industry in Russia can be influenced by changes in supply and demand through the price mechanism. If the market prices decrease, an increase in the cost of output could be seen, which might wrongly suggest a decrease in energy requirements for unit production. Although some theoretical models acknowledge that price changes can affect energy efficiency improvements, it is challenging to combine this effect with the calculation of cost indicators of energy efficiency. When price-market effects are removed, the cost of production can be calculated under “real” conditions, and comparisons can be made both internationally and over time. Physical indicators calculate the specific energy consumption in relation to the physical measurement of the product. This means that per ton of product, for instance, it can be assessed. Physical indicators have an advantage because there is a direct correlation between the indicator and the energy efficiency technology. This implies that an improvement in technology will lead to savings in specific energy consumption and an improvement in the indicator that assesses certain energy requirements per ton of product. Since physical energy efficiency indicators are used in energy efficiency analysis at less aggregated levels, the issues associated with structural effects are reduced.