In much the same way that rising oil prices in the 1970s profoundly influenced petroleum production and consumption, an era of persistently low prices will have far-reaching consequences for petroleumsupply and demand. Many of those consequences are indirect and willnot be widely understood for some time; others are more clear-cut. In this paper, some of the anticipated consequences will be explored, including revised estimates of domestic petroleum reserves, production, and consumption, as well as oil imports. The focus is on transportation, the largest consumer of petroleum products and the most petroleum-dependent sector of the u.s. economy, and the conclusion isthat persistently low oil prices will result in a significant decline in domestic oil production, a modest increase in petroleum consumption overall and in transportation (primarily due to reduced fuel efficiency in the vehicle fleet), and a substantial increase in our import dependence and vulnerability to supply interruptions and priceshocks. Together, these effects increase the need for improved fuelefficiency and fuel flexibility, yet reduce the market incentive todevelop and introduce new fuel-saving technologies. This paper appeared in transportation research record no. 1155, transportation energy. For covering abstract see irrd no 818421.
Abstract