Friday, May 11, 2012
[IWS] CBO: ENERGY SECURITY IN THE UNITED STATES [9 May 2012]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Congressional Budget Office (CBO)
ENERGY SECURITY IN THE UNITED STATES [9 May 2012]
[full-text, 38 pages]
[full-text, 5 pages]
Energy Security and Its Economic Significance 1
What Is Energy Security? 1
Economic Effects of Disruptions in the Supply of Energy 1
Potential Effects of Disruptions in Key Energy Markets 4
Box 1. Oil Independence and the Worldwide Oil Market 9
Natural Gas 10
Nuclear Power 13
Renewable Sources 13
What Role Can the Government Play in Enhancing Energy Security? 14
Energy Security for Electricity 14
Regional Generation, Spare Capacity, and Flexibility 15
Box 2. Disruptions in the Delivery of Electricity 18
Electricity Pricing and Demand 18
Energy Security for Transportation 19
Box 3. Reduced Vulnerability to High Heating Costs 20
Refinery Capacity 21
Consumer Demand for Oil 21
Policy Options to Dampen the Effects of Disruptions in Oil Supplies 22
Lists of Tables and Figures 29
About This Document 30
Energy use is pervasive throughout the U.S. economy. Households and businesses use energy from oil, natural gas, coal, nuclear power, and renewable sources (such as wind and the sun) to generate electricity, provide transportation, and heat and cool buildings. In 2010, energy consumption represented 8.4 percent of U.S. gross domestic product.
Disruptions in the supply of commodities used to produce energy tend to raise energy prices, imposing an increased burden on U.S. households and businesses. Disruptions can also reduce the nation’s economic output and thus people’s income. This paper examines energy security in the United States—that is, the ability of U.S. households and businesses to accommodate disruptions of supply in energy markets—and actions that the government could take to reduce the effects of such disruptions.
The vulnerability of the U.S. economy to disruptions in the supply of a particular energy source depends on the importance of that energy source to the economy. More than 80 percent of the energy consumed in the United States comes from oil, natural gas, or coal. For each source, several factors determine how vulnerable the nation is to a disruption in its supply:
The extent to which disruptions occurring anywhere in the world affect energy costs in the United States,
The likelihood of disruptions and the ability of energy suppliers to respond to disruptions if they occur, and
The ability of energy consumers (including electricity producers, oil refiners, households, and businesses) to shift to other, less expensive sources of energy.
Consumers and the economy are more vulnerable to disruptions in oil markets than they are to disruptions in other energy markets, as shown by a comparison of the two largest energy-consuming sectors of the U.S. economy—transportation and electricity. In particular, transportation is almost exclusively dependent on oil supplied in a global market in which disruptions can cause large price changes. Moreover, consumers have few easy and inexpensive options for switching to other fuels or reducing consumption of transportation fuels. In contrast, electricity can be produced from several sources of energy, all of which are less prone to disruptions, and consumers have more options for reducing demand for electricity.
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