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US military expenditures to protect the use of Persian Gulf oil for motor vehicles

  • Delucchi, Mark A.
  • Murphy, James J.

Analyses of the full social cost of motor vehicle use in the US often estimate an "oil import premium" that includes the military cost of defending oil supplies from the Persian Gulf. Estimates of this cost have ranged from essentially zero to upwards of a $1 per gallon (about $0.25 per liter). In this paper, we attempt to narrow this range, by carefully answering the question: "If the US highway transportation sector did not use oil, how much would the US federal government reduce its military commitment in the Persian Gulf?" We work towards our answer in five steps, accounting for interests not related to oil, the interests of other oil-consuming countries, the interests of producers apart from the interests of consumers, and the interests of non-highway users of oil. We estimate that were there no oil in the Persian Gulf, then US combined peacetime and wartime defense expenditures might be reduced in the long run by roughly $27-$73 billion per year (in 2004 dollars), of which roughly $6-$25 billion annually ($0.03-$0.15 per gallon or $0.01-$0.04 per liter) is attributable to motor-vehicle use.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 6 (June)
Pages: 2253-2264

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Handle: RePEc:eee:enepol:v:36:y:2008:i:6:p:2253-2264
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  1. Ogden, Joan M. & Williams, Robert H. & Larson, Eric D., 2004. "Societal lifecycle costs of cars with alternative fuels/engines," Energy Policy, Elsevier, vol. 32(1), pages 7-27, January.
  2. Bohi, Douglas R., 1991. "On the macroeconomic effects of energy price shocks," Resources and Energy, Elsevier, vol. 13(2), pages 145-162, June.
  3. Delucchi, Mark & Murphy, James, 2008. "US military expenditures to protect the use of Persian Gulf oil for motor vehicles," Institute of Transportation Studies, Working Paper Series qt0j9561zd, Institute of Transportation Studies, UC Davis.
  4. Hall, Darwin C., 1992. "Oil and nationalal security," Energy Policy, Elsevier, vol. 20(11), pages 1089-1096, November.
  5. Parry, Ian & Darmstadter, Joel, 2003. "The Costs of U.S. Oil Dependency," Discussion Papers dp-03-59, Resources For the Future.
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  7. James D. Hamilton, 1985. "Historical Causes of Postwar Oil Shocks and Recessions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 97-116.
  8. Paul Dunne & Duncan Watson, 2000. "Military expenditure and employment in South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 587-596.
  9. Donald W. Jones, Paul N. Leiby and Inja K. Paik, 2004. "Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-32.
  10. Hamilton, James D & Herrera, Ana Maria, 2004. "Oil Shocks and Aggregate Macroeconomic Behavior: The Role of Monetary Policy: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(2), pages 265-86, April.
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