Environmental Engineering Reference
In-Depth Information
consumption over the next ten years or so, and substantially more in
the decades beyond that, could make a big dif erence.
h e most basic facts are simple. A given change in oil prices has a
smaller impact on people's pocketbooks if they consume less oil, which
in turn insulates the broader economy. (If they consume ethanol instead
of oil, though, they aren't protected, because whenever gasoline prices
spike, ethanol prices do too.) Something similar is true for industry:
the less oil it uses, the less likely it is to be hurt when oil prices spike.
It's dii cult to quantify these consequences, but it isn't impossible to
try; in fact something of a cot age industry aimed at estimating the
impacts has l ourished over the past thirty years. In 2007, a team of
economists at Oak Ridge National Laboratory, whose scientists study
everything from nanotechnology to national security, produced an
updated estimate of the benei ts. 61 h ey looked carefully at historical
pat erns in oil-price volatility and U.S. economic performance, using
statistical methods to estimate the relationship between the two, and
they concluded that every time the United States reduced its oil con-
sumption by one barrel, the broader economy benei ted to the tune of
somewhere between three and twelve dollars because it became less
vulnerable to jit ery crude prices. 62 h is works out to between one and
four billion dollars of annual benei ts for every million-barrel-a-day cut
in U.S. oil consumption.
Cut ing oil consumption also brings a second benei t: just as rais-
ing U.S. oil production does, it can help reduce the world price of oil.
h e logic and the numbers for consumption are almost a mirror image
of those for production. Less demand for oil means less oil must be
produced. h e way the market tells producers to cut production is by
driving down prices. h e only limit, just like with new U.S. supplies,
is that some producer may respond by preemptively cut ing its own
production, helping to prop prices back up. h e Oak Ridge economists
have created a model of how the world oil market would respond to a
cut in U.S. oil consumption and what this would mean for oil prices.
h en they look at how much money those lower prices would save
consumers. In the end, they i nd that every time the United States cuts
its oil consumption by a barrel a day, prices fall a tiny bit; when you
add up those savings across the millions of barrels the United States
 
 
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