Oil Shock: Options for Policymakers

SAFE Analysis of Energy Policy Options Highlights Need for Fundamental Changes to Nation’s Energy Use

SAFE has released “Oil Shock: Options for Policymakers,” a paper examining the causes and effects of oil price spikes, along with a menu of possible short- and long-term options for dealing with energy security challenges.

Specifically, the paper argues that many of the solutions most often offered by commentators—particularly accessing the Strategic Petroleum Reserve—would have little to no effect on current high prices.  The paper also examines other short-term measures—all of which have significant drawbacks—including reducing the use of heating oil and other non-transportation petroleum fuels, easing ethanol import tariffs, increasing exports of natural gas, and more. Instead, SAFE recommends medium- and long-term fundamental changes to the nation’s energy use, including the electrification of the short-haul ground transportation system.

“Ultimately, the growth in demand abroad has placed us in a position of relative weakness, in which our alternatives are more limited and more complex,” the report states.  “Therefore, as long as our economy remains dependent on oil, price spikes will continue to have a deleterious effect on the United States.”