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Measuring energy security: Can the United States achieve oil independence?

  • Greene, David L.
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    Stochastic simulation of the direct economic costs of oil dependence in an uncertain future is proposed as a useful metric of oil dependence. The market failure from which these costs arise is imperfect competition in the world oil market, chiefly as a consequence of the use of market power by the Organization of the Petroleum Exporting Countries (OPEC) cartel. Oil dependence costs can be substantial. It is estimated that oil dependence costs to the US economy in 2008 will exceed $500 billion. Other costs, such as military expenditures or foreign policy constraints are deemed to be largely derivative of the actual or potential economic costs of oil dependence. The use of quantifiable economic costs as a security metric leads to a measurable definition of oil independence, or oil security, which can be used to test the ability of specific policies to achieve oil independence in an uncertain future.

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    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 38 (2010)
    Issue (Month): 4 (April)
    Pages: 1614-1621

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    Handle: RePEc:eee:enepol:v:38:y:2010:i:4:p:1614-1621
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    1. Dermot Gately, 2004. "OPEC's Incentives for Faster Output Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 75-96.
    2. 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.
    3. Greene, David L & Jones, Donald W & Leiby, Paul N, 1998. "The outlook for US oil dependence," Energy Policy, Elsevier, vol. 26(1), pages 55-69, January.
    4. Delucchi, Mark A. & Murphy, James J., 2008. "US military expenditures to protect the use of Persian Gulf oil for motor vehicles," Energy Policy, Elsevier, vol. 36(6), pages 2253-2264, June.
    5. Daniel L. Greene, 2007. "Future Prices and Availability of Transport Fuels," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/15, OECD Publishing.
    6. Greene, David L., 1991. "A note on OPEC market power and oil prices," Energy Economics, Elsevier, vol. 13(2), pages 123-129, April.
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