About
Axel Pierru was appointed Vice President of Knowledge and Analysis by the Board of Trustees of KAPSARC in December 2023. In this role, he oversees and provides thought leadership to KAPSARC’s research and analysis activities. He joined KAPSARC in 2011, after spending 15 years at IFP Energies Nouvelles in France where he led research and consulting projects and taught energy economics and finance to postgraduate students. He has served in various leadership roles at KAPSARC, including serving as interim Vice President for Research. From 2014 to 2023 he was a program director, leading the Energy Systems & Modeling, Energy & Macroeconomics, and Energy Macro & Micro-Economics research programs. Dr. Pierru earned his Ph.D. in economics from University Paris 1 Pantheon-Sorbonne (France). He also holds an HDR degree, which is a French accreditation to supervise research. In 2007, Dr. Pierru was awarded Chevalier dans l’Ordre des Palmes Académiques (knighthood award in the academic field) by the French Ministry for National Education. He is an editor of The Energy Journal, as well as the corecipient of the 2023 OPEC Award for the Best Energy Research Paper, a first-time honor from OPEC. He leads the Knowledge & Analysis team in designing applied research that blends methodological innovation with practical significance for policymaking. His expertise covers energy economics, policy and finance, the oil market, energy transitions, and commodity-exporting economies. Dr. Pierru has a proven track record of methodological innovations with over 50 journal papers to his name. He has been a key contributor to developing new research avenues, such as the role of OPEC in stabilizing the oil market, the economic modeling of price controls, or the evaluation of investment projects by international oil companies facing various tax systems. He also coauthored with Denis Babusiaux the book Corporate Investment Decisions and Economic Analysis: Exercises and Case Studies (2005), a culmination of years of teaching, consulting, and research.
Publications
05 June 2024
Energy Transition in Oil-Dependent Economies: Public Discount Rates for Investment Project EvaluationThe selection of welfare-enhancing projects necessitates the determination of the present value of cash flows from a public policy perspective. For an oil-exporting economy, the domestic energy transition often implies displacing oil from domestic consumption. Economic dependence on ...
28 May 2024
Managing the Oil Market Under Misinformation: A Reasonable Quest?This paper examines the type and quality of information that OPEC needs to stabilize the oil market. We extend our previous structural model, in which OPEC makes potential mistakes in judging the size of market shocks, to now include the possibility that OPEC misestimates how the mar...
08 June 2023
Assessing Climate Mitigation Benefits of Public Support to CCS-EOR: An Economic AnalysisGovernment support for CCS-EOR projects is sometimes contested on the grounds that the resulting increase in oil production undermines their environmental benefits. Addressing this concern requires determining the effects of implementing CCS-EOR on global CO2 emissions. This paper pr...
23 September 2022
Resilience of Saudi Arabia’s Economy to Oil Shocks: Effects of Economic ReformsWe assess the extent to which the implementation of Saudi Vision 2030 policies enhances the Saudi economy’s resilience to oil price and production shocks, and to the productivity of tradable and non-tradable goods. We extend Blazquez et al.’s (2021) dynamic stochastic g...
19 August 2020
Sectoral and Economy-Wide Effects of Domestic Energy Price Reforms in Saudi ArabiaThis paper simulates the sectoral and economy-wide consequences of deregulating energy prices in Saudi Arabia. Our analysis is based on KAPSARC’s general equilibrium energy model (KEMGE), a new hybrid computable general equilibrium model (CGE). The model examines the effects of full ...
06 August 2020
Cooperate or Compete? Insights from Simulating a Global Oil Market with No Residual SupplierStructural changes in the global oil sector are disrupting conventional market dynamics and the roles played by competing and cooperating producers. Industry players are adjusting to the shale (or ‘tight’) oil revolution and the possibility of plateauing or peaking global oil demand....
21 May 2020
Analyzing the Effects of Saudi Arabia’s Economic Reforms Using a Dynamic Stochastic General Equilibrium ModelSaudi Arabia is the world’s second-largest holder of proved oil reserves and the second-largest producer of petroleum liquids. The country is the largest exporter of crude oil, with a share of 16% of total crude oil exports in 2017. Saudi Arabia’s economy is heavily oil dependent.
01 March 2020
The Opportunity Cost of Domestic Oil Consumption for an Oil Exporter: Illustration for Saudi ArabiaWhen appraising investment projects from a public perspective, a barrel of oil displaced from or added to domestic consumption has to be valued at its opportunity cost. This paper develops a partial-equilibrium framework to assess the opportunity cost of domestic oil consumption for ...
05 February 2019
Estimating the Household Consumption Function in Saudi ArabiaThe authors’ estimation shows that both income and wealth have significant effects on household consumption in Saudi Arabia, with a long-run marginal pro... The sensitivity of consumption to income and wealth in Saudi Arabia appears to be consistent with the growth of the Saudi economy.
10 June 2018
The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the InterconnectorCountries in the Gulf Cooperation Council (GCC) have installed a network of high-voltage transmission lines, known as the GCC Interconnector, which links the member states of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE). The Interconnector has success...
24 May 2018
The Economic Impact of Price Controls on China’s Natural Gas Supply ChainDespite significant progress made by China in liberalizing its natural gas market, certain key areas such as market access and pricing mechanisms remain heavily monopolized or controlled by the government. To assess how such distortions impact the market, we developed a Mixed Complem...
25 March 2018
The Value of Saving Oil in Saudi ArabiaWhat is the value of saving a barrel of oil that would otherwise had been consumed domestically? This study explores the question, taking a long-run perspective into a general equilibrium approach. In the case of Saudi Arabia, the difference between the domestic price of oil and the ...
20 December 2017
Restructuring Saudi Arabia’s Power Generation Sector: Model-Based InsightsSaudi Arabia plans to reform and privatize its power generation sector as part of the Kingdom’s Vision 2030. To provide analytical insights, we developed a model that simulates the restructuring of the electricity market, along with reforming fuel prices to an energy equivalent of $3...
04 October 2017
Managing Oil Revenue Stabilization Funds: A Framework for Developing PoliciesOil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way that Saudi government deposits and reserve at the Saudi Arabian Monetary Authority (SAMA) have historically served as a buffer to decouple government budget from oil revenue flu...
29 September 2016
Potential Gains From Reforming Price Caps in China’s Power SectorWhen energy sectors transition from government-controlled to market-driven systems, the legacy regulatory instruments can create unintended market distortions and lead to higher costs. In China, the most notable regulatory throwback is ceilings on electricity prices that generators c...
24 December 2015
The Prospects for Coal-fired Power Generation in Saudi ArabiaAlmost all of Saudi Arabia’s electric power generation is fueled by oil and gas. Plans for future capacity envisage nuclear and renewables supplementing this mix and freeing up oil for other revenue-generating opportunities. Coal-fired generation has been promoted in some Gulf Cooper...
07 September 2015
Economic Impacts of Debottlenecking Congestion in the Chinese Coal Supply ChainChina’s coal industry grew at unprecedented rates during the first decade of the 2000s in order to support equally unprecedented economic growth. In that type of environment, it is impossible for the capacities of every link in the supply chain to be correctly sized all the time. In ...
07 June 2015
Efficient Industrial Energy Use: The First Step in Transitioning Saudi Arabia’s Energy MixExternal observers worry about whether Saudi domestic consumption of oil will crowd out exports. This is based on simple extrapolations which suggest that in a little more than 20 years Saudi Arabia may become a net importer of hydrocarbon fuels. However, our research does not suppor...
06 January 2015
Why build energy models as MCPs? An economic perspectiveThe discipline of microeconomics focuses on the outcomes of the actions of economic agents, where economic agents can be individuals as producers and consumers or organizations that deliver goods or services. Microeconomists have developed a collection of models to understand and rep...
07 March 2014
Lowering Saudi Arabia’s fuel consumption and energy system costs without increasing end consumer pricesSaudi Arabia aims to reduce the growth of its energy demand. This paper outlines an approach that could help the country to reduce substantively its current fuel consumption and could result in a net economic gain without increasing current end consumer prices and while maintaining p...
