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

W. J. Baumol, E. N. Wolff

    Research output: Contribution to journalArticlepeer-review


    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

    Original languageEnglish (US)
    Pages (from-to)891-913
    Number of pages23
    JournalJournal of Political Economy
    Issue number5
    StatePublished - 1981

    ASJC Scopus subject areas

    • Economics and Econometrics


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