John Whitehead on the SPR
Posted by Evan Herrnstadt on March 24, 2008
Responding to a claim by Congressional Democrats
that (edit, left for posterity), John Whitehead over at EnvEcon thinks about the impact of the SPR fill and does a quick-and-dirty estimate of the drop in gas prices that would accompany a suspension of current policy. Key result:
Given the short run elasticity of .10, U.S. gas/oil consumption would need to fall by almost half to nudge gas prices down by $0.16/gallon.
In extremely vain fashion, here is a link to a very qualitative SPR post I wrote recently. John’s numbers back up my
half-assed informal analysis and provide better context for scrutinizing simplistic anti-SPR arguments. As the GAO and I have pointed out, there are different reasons for re-examining current SPR fill policy that might hold more water (and less sweet crude).