FAST FIX: U.S. budget office finds producing more domestic oil won’t minimize pain at pump; using less will
From what relatively little attention a report by the U.S. Congressional Budget Office on energy security received last month, one conclusion jumps out at us here at The Energy Fix. We’ve pasted it in below, along with the most relevant infographic.
“Policies that promoted greater production of oil in the United States would probably not protect U.S. consumers from sudden worldwide increases in oil prices, even if increased production lowered the world price of oil on an ongoing basis. In fact, such lower prices would encourage greater use of oil, thus making consumers more vulnerable to increases in oil prices. Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.
“In contrast, policies that reduced the use of oil and its products would create an incentive for consumers to use less oil or make decisions that reduced their exposure to higher oil prices in the future, such as purchasing more fuel-efficient vehicles or living closer to work. Such policies, however, would impose costs on vehicle users (in the case of fuel taxes or fuel-efficiency requirements), or taxpayers (in the case of subsidies for alternative fuels or for new vehicle technologies). But the resulting decisions would make consumers less vulnerable to increases in oil prices.”
This study was prepared by Andrew Stocking of CBO’s Microeconomic Studies Division and can be found here.