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EMF OP 40: Assessing the Economic Cost of U.S. Oil Conservation

Occasional Paper


This article examines the costs of U.S. oil conservation by using parameters from five world oil models used in a recent Energy Modeling Forum study. Variation in the estimated cost of oil conservation across the models suggests that achieving oil conservation through flexible policies that adjust to market conditions would better serve economic efficiency than setting government-mandated levels of oil consumption. The analysis also finds net world oil conservation is likely to be somewhat less than gross U.S. conservation; U.S. oil conservation lowers the world oil price and stimulates non-U.S. oil consumption. When the gains in non-U.S. oil consumption are taken into account, the estimated costs of achieving a given level of conservation are higher.

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