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U.S. oil demand and conservation

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Abstract

Recent history has lent casual support to three popular theories about U.S. oil demand: (i) U.S. oil consumption is very insensitive to changing oil prices, (ii) non‐price conservation has reduced U.S. oil demand, and (Hi) U.S. oil consumption falls more when oil prices rise than it rises when oil prices fall. Together, these theories suggest that one could hold oil consumption constant without much economic sacrifice. The authors' econometric evidence does not support these theories. This evidence indicates that U.S. oil consumption is fairly responsive to price changes over the long run, but with a considerable lag. Sharp oil price increases—or an equivalent policy action—would be needed to hold oil consumption constant during the 1990s.
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  • Stephen P. A. Brown & Keith R. Phillips, 1990. "U.S. oil demand and conservation," Working Papers 9005, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:9005
    Note: Published as: Brown, S.P.A. and Keith R. Phillips (1991), "U.S. Oil Demand and Conservation," Contemporary Economic Policy 9 (1): 67-72.
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    References listed on IDEAS

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    1. Hogan, William W., 1989. "A dynamic putty--semi-putty model of aggregate energy demand," Energy Economics, Elsevier, vol. 11(1), pages 53-69, January.
    2. Dermot Gately & Peter Rappoport, 1988. "The Adjustment of U.S. Oil Demand to the Price Increases of the 1970s," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 93-107.
    3. Dufour, Jean-Marie, 1982. "Recursive stability analysis of linear regression relationships: An exploratory methodology," Journal of Econometrics, Elsevier, vol. 19(1), pages 31-76, May.
    4. Stephen P. A. Brown & Keith R. Phillips, 1986. "Exchange rates and world oil prices," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Mar, pages 1-10.
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    Cited by:

    1. Lin Chan, Hing & Kam Lee, Shu, 1997. "Modelling and forecasting the demand for coal in China," Energy Economics, Elsevier, vol. 19(3), pages 271-287, July.
    2. HILLARD G. Huntington, 1993. "Limiting U.S. Oil Imports: Cost Estimates," Contemporary Economic Policy, Western Economic Association International, vol. 11(3), pages 12-29, July.
    3. Stephen P. A. Brown & Hillard G. Huntington, 1994. "The Economic Cost Of U.S. Oil Conservation," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 42-53, July.

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