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EMF OP 42: LDC Cooperation in World Oil Conservation Policies

Environmental concerns are leadingmany industrialized countries to consider measures which would reducetheir consumption of oil, as well as other energy sources. Thereluctance of the developing counties to join in these conservationefforts will reduce the policy’s effectiveness. This paper explores theconditions under which the exclusion of important oil consumers (likedeveloping countries) would weaken unilateral OECD actions to conserveoil.

Oil conservation undertaken unilaterally by the OECD can lead to lowerworld oil prices, and offsetting increases in oil consumptionelsewhere. We provide estimates of these offsetting effects and howthey influence the costs of participating in the policy. We alsoexamine the effect of adding and excluding countries to a coordinatedpolicy of oil conservation. Reprinted from The Energy Journal Special Issue 1994: "The Changing World Petroleum Market".