How to avoid another oil-price shock
While Americans have enjoyed the decline in oil prices during the 1981 to 1982 surplus, underlying supply-and-demand forces increase the chances of another price shock. A variable oil-import tax would maintain price levels at the 1980 level and, by transferring income from the oil-exporting countries to the US, would reduce the federal deficit by $15 to $20 million. A variable tariff would encourage conservation and oil substitution and would encourage importers to seek the lowest prices. Government intervention is justified because of the uncertainties of a world oil market that is not truly competitive. Other oil-importing countries will benefit from the pressure to hold prices down, and internal tensions within OPEC make it less likely that collective control will increase. An import duty is more equitable than the price constraints of the 1960s because it assures a stable environment for domestic production. (DCK)
- Research Organization:
- Univ. of Western Ontario, London
- OSTI ID:
- 6583028
- Journal Information:
- Challenge; (United States), Vol. 25:3
- Country of Publication:
- United States
- Language:
- English
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