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EMF OP 44: Some Implications of Increased Cooperation in World Oil Conservation

In this article, Stephen Brown andHillard Huntington combine recent studies of world oil markets and thenascent literature on damage estimates from carbon dioxide (CO2)emissions to derive cost and benefit curves for the reduction of theseemissions through cooperative programs of oil conservation. Theiranalysis shows that the desirability of extending cooperation in globalenergy conservation policies is essentially an empirical issue ratherthan a conceptual one. The current evidence suggests that over the nexttwo decades, the Organization for Economic Cooperation and Developmentwill have an incentive to reduce its oil consumption and the associatedCO2 emissions by more than is optimal from a worldperspective. During this period, extending cooperation to theoil-importing developing countries may push oil conservation too far.Reprinted in Federal Reserve Bank of Dallas, Economic Review, Second Quarter, 1998