ENERGY BUDGETING: JOULES OR DOLLARS?

The assumptions which must be made to accept ratios of energy output to energy input as an efficiency measure with normative significance are examined and found to be unrealistic. It is considered better for governments to modify market prices where divergences exist between private and social costs or benefits than to use energy ratios, or prices determined by energy considerations, as a criterion in allocating resources. Moreover, in a trading world, energy considerations are often of little use in positive analysis of the relationship between energy prices and the prices, or profitability of production, of different foods in a particular country