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 109. Nations intervene in the 'market price' of energy in a variety of ways. Domestic taxes (or subsidies) on electrical power rates, oil, gas and other fuels are most common. They vary greatly between and even within countries where different states, provinces, and sometimes even municipalities have the right to add their own tax. Although taxes on energy have seldom been levied to encourage the design and adoption of efficiency measures, they can have that result if they cause energy prices to rise beyond a certain level – a level that varies greatly among jurisdictions.

110. Some nations also maintain higher-than-market prices on energy through duties on imported electricity, fuel, and fuel products. Others have negotiated bilateral pricing arrangements with oil and gas producers in which they stabilize prices for a period of time.

111. In most countries, the price of oil eventually determines the price of alternative fuels. Extreme fluctuations in oil prices, such as the world has experienced recently, endanger programmes to encourage conservation. Many positive energy developments worldwide that made sense with oil above $25 per barrel, are harder to justify at lower prices. Investments in renewables, energy-efficient industrial processes, transport vehicles, and energy-services may be reduced. Most are needed to ease the transition to a safer and more sustainable energy future beyond this century, This goal requires a long, uninterrupted effort to succeed.

112. Given the importance of oil prices on international energy policy, the Commission recommends that new mechanisms for encouraging dialogue between consumers and producers be explored.

113. If the recent momentum behind annual gains in energy efficiency is to be maintained and extended, governments need to make it an explicit goal of their policies for energy pricing to consumers. Prices needed to encourage the adoption of energy-saving measures may be achieved by any of the above means or by other means. Although the Commission expresses no preference, 'conservation pricing' requires that government take a long-term view in weighing the costs and benefits of the various measures. They need to operate over extended periods, dampening wild fluctuations if the price ot primary enerqy, which can impair proqress towards energy conservation.

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114. It is clear that a low energy path is the best way towards a sustainable future. But given efficient and productive primary energy, this need not mean a shortaqe of essential energy services. Within the next 50 years, nations have the opportunity to produce the same levels of energy services with a little as half the primary supply currently consumed. This requires profound structural change in socio-economic and institutional arrangements and is an important challenge /…