THE ECONOMIC COST OF U.S. OIL CONSERVATION |
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| Authors: | STEPHEN P A BROWN HILLARD G HUNTINGTON |
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| Institution: | *Research Department, Federal Reserve Bank of Dallas, and Energy Modeling Forum, Stanford University, respectively. This is a revised version of a paper presented at the Western Economic Association International 68th Annual Conference, Lake Tahoe, Nev., June 20–24, 1993, in a session organized by Donald A. Norman, American Petroleum Institute. The authors thank Susan August Brown, David Gould, Tony Reinsch, Mark Rodekohr, Lori Taylor, John Weyant, Mine Yücel, Ben Zycher, and an anonymous referee for helpful comments and suggestions, as well as the modelers participating in the eleventh EMF study, International Oil Supplies and Demands. However, the authors assume responsibility for any errors or omissions. The views expressed in this article are the authors' and do not necessarily reflect those of the Federal Reserve Bank of Dallas, the Federal Reserve System, the Energy Modeling Forum, or Stanford University. |
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| Abstract: | This article examines the costs of U.S. oil conservation by using parameters of five world oil models from a recent Energy Modeling Forum study. Variation in the estimated cost of oil conservation across the models suggests that achieving oil conservation through flexible policies that adjust to market conditions would better serve economic efficiency than would setting government-mandated levels of oil consumption. Additionally, net world oil conservation is likely to be somewhat less than gross U.S. conservation. U.S. oil conservation lowers the world oil price and stimulates non-U.S. oil consumption. Including the gains in non-U.S. oil consumption raises the estimated costs of achieving a given conservation level . |
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