Subsidies to new energy sources: do they add to energy stocks? ( USA).

Energy-production subsidies are, paradoxically, shown to be likely to increase US dependence on imported oil. Standard studies of net energy yields are shown to be seriously biased upward for two reasons: 1) many omit indirect energy inputs, which, this input-output calculation shows, probably causes large errors; 2) they all omit the energy opportunity costs of nonenergy inputs (e.g., the fuel substituted elsewhere for the labor used to produce energy). Proves that, absent externalities, any fuel-output subsidy which causes an otherwise unprofitable expansion must yield an incremental fuel output smaller than the increment in energy input plus the energy opportunity costs of other inputs. -Authors