Energy efficiency and energy depletion analysis in oil-exporting developing countries

Abstract

There is a significant research gap on the efficiency and sustainability of oil-exporting developing countries. This study employs a slacks-based-measure data-envelopment-analysis (SBM-DEA) model to optimize oil well benefits while minimizing undesirable outputs, such as carbon emissions and energy degradation. Furthermore, we apply a Malmquist Productivity Index (MPI) to assess and compare dynamic energy productivity efficiency among Latin American and African countries. Our analysis of 14 countries in these regions from 2006 to 2020 demonstrates that Equatorial Guinea, Gabon, Peru, and Bolivia exhibit higher energy efficiency than counterparts like Angola, Algeria, Mexico, Ecuador, and Colombia. Notably, our findings suggest that countries with higher extraction rates tend to be less efficient, resulting in greater environmental impact relative to economic benefits from extraction. In conclusion, this study underscores the importance of energy efficiency policies, which can significantly mitigate Greenhouse Gas (GHG) emissions and resource depletion at the national level while enhancing industry sustainability. We recommend that governments implement policies aimed at reducing energy consumption within the oil sector, including the reduction of electricity subsidies. Adopting realistic energy extraction costs is crucial in facilitating the transition towards renewable energy sources.