THE ECONOMIC COST OF U.S. OIL CONSERVATION

"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". Copyright 1994 Western Economic Association International.

LIMITING U.S. OIL IMPORTS: COST ESTIMATES

The Energy Modeling Forum recently compared ten world oil models. This paper examines the costs of curtailing growth in U.S. oil imports based upon the supply and demand responses to price in six of these models. The analysis estimates direct resource costs over the 1989-2010 period from U.S. results for aflat and a rising price case spanning an $18 per barrel difference by the year 2000 and beyond. To provide a balanced perspective, the paper also includes estimates of some potential benefits from import-reduction policies. These benefits include smaller wealth transfers during a disruption and lower oil prices without disruptions. While keeping future oil imports at today's level appears to be quite costly, the results here indicate that less aggressive import-reduction programs offer some opportunity for economic gain. Copyright 1993 Western Economic Association International.