Reducing U.S. oil-import dependence: a tariff, subsidy, or gasoline tax?

Carol Dahl and Mine Yucel

Economic and Financial Policy Review, 1990, issue May, 17-25

Abstract: Low oil prices and rising oil imports have caused growing concern about U.S. vulnerability to oil-supply shocks. Mine K. Yucel and Carol Dahl devise a measure of vulnerability and use it to compare three policies that have been proposed to reduce U.S. vulnerability to oil-supply disruptions: a 25-percent oil-import tariff, a $5-per-barrel subsidy to domestic oil producers, and an increase in the gasoline tax from 9 cents to 25 cents per gallon. ; Yucel and Dahl find that the tariff would make the United States less vulnerable to disruptions. By increasing both consumer and producer prices, the tariff lowers consumption while encouraging domestic production. The increased gasoline tax could either lower or raise vulnerability. If domestic supply is not very responsive to price changes, the gasoline tax increases vulnerability. If domestic supply is responsive to price changes, the gasoline tax reduces vulnerability. The subsidy encourages increased consumption and production, leading to a faster depletion of the resource base. Hence, the subsidy would make the United States more vulnerable to oil-supply shocks.

Keywords: Power resources - Prices; Petroleum industry and trade; Tariff (search for similar items in EconPapers)
Date: 1990
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedder:y:1990:i:may:p:17-25

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic and Financial Policy Review from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().