Forecasting Models for Energy Policymaking
LOGISTICS MANAGEMENT INST BETHESDA MD
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DoD energy policy contends with three dimensions of the energy problem. Oil supply disruptions overseas can hurt DoD and the U.S. economy economic interdependence means that vulnerability would remain the most pressing energy problem even if the U.S. were energy independent. Nevertheless, U.S. dependence on foreign oil sources permits foreign oil producers to charge U.S. consumers prices over free market levels. Finally, conventional oil will become prohibitively costly sometime in the 21st century, requiring DoD and the worlds economy to make the transition to replacement fuels. Making policy to deal with the dimensions of the energy problem requires forecasts, and making forecasts required models. However, not all forecasting models will prove equally helpful to DoD. Models can help DoD form judgments about the outlook for future prices. This study commends the Salant and Tussing models for this purpose. Our models can help DoD shape policies to reduce vulnerability to disruptions. The Verleger, Erfle and Mork Forecasts, and the Teisberg Oil Stockpile Model, can all help DoD hedge against the prospect of disruptions in forming supply assurance policy.
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