CEES Working Paper Series

Cutler J. Cleveland and Robert K. Kaufmann
Center for Energy and Environmental Studies

Boston University

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Introduction

Following his four predecessors, President Bush has identified US dependence on imported oil as an urgent energy, economic, and national security concern. Imports now supply more than 50 percent of US oil consumption: by 2020 dependence on imports will reach 64 percent (US DOE, 2001). To close this ‘supply gap’ the President’s energy plan promotes the development of domestic resources, based on the assumption that economic incentives will increase domestic production. If realized, this will reduce dependence on imported oil and reduce OPEC’s ability to affect aggregate oil supply and price. Reducing OPEC’s influence would reduce the probability of oil price shocks, which have a recessionary and inflationary effect on the economy.

 

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