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Ending $4 Billion U.S. Oil Subsidy Seen Having Minimal Impact

  • Domestic oil production could fall 5 percent by 2030
  • Eliminating subsidies wouldn’t affect demand, carbon emissions

Eliminating $4 billion of petroleum subsidies in the U.S. would have only a minor affect on oil production and demand and boost the country’s influence in advocating global climate change action, according to a report for the Council on Foreign Relations.

Withdrawing oil-drilling subsidies could cut domestic production by 5 percent by 2030, which could increase international oil prices by just 1 percent, Gilbert Metcalf, a professor of economics at Tufts University, said in the report. Local natural gas prices could rise as much as 10 percent, while both production and consumption would probably fall as much as 4 percent, according to the report.