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National Defense, Oil Imports, and Bio-Energy Technology


Robert M. Ames


Solazyme, Inc.; Yale Graduates Energy Study Group

Anthony Corridore


Lafarge Corp.; Yale Graduates Energy Study Group

Paul W. MacAvoy


Yale School of Management; Yale Graduates Energy Study Group


Journal of Applied Corporate Finance, Vol. 16, No. 1, Winter 2004

Abstract:     
Terrorist disruptions of crude oil supplies anywhere in the world now pose a serious threat to the U.S. economy. Price shocks from terrorist acts could have a pervasive negative effect on producer costs and consumer behavior, with the potential to derail the current economic recovery. The authors propose insulating U.S. energy prices from world price volatility by gradually eliminating imports of crude oil from non-Western Hemisphere sources.

The U.S. now operates with half of its crude supply from offshore sources. As much as half of these imports could be replaced by expanded production from projects that have been shelved for political reasons or because prices are currently too low. The remainder could come from an extensive and currently untapped supply of crude oil substitutes, particularly bio-energy sources such as ethanol from corn and switchgrass. These sources would be much less vulnerable to terrorist disruption.

The authors also estimate that the costs of pursuing a strategy of eliminating imports would not be nearly as large as conventional wisdom suggests. Even though crude prices would be somewhat higher than current levels, they would also be much more stable, and this price stability would help promote a stronger and more secure economy in the long run.

Number of Pages in PDF File: 20

Keywords: Oil, National Defense, Terrorism, Bio-Energy

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Date posted: June 3, 2004  

Suggested Citation

Ames, Robert M., Corridore, Anthony and MacAvoy, Paul W., National Defense, Oil Imports, and Bio-Energy Technology. Journal of Applied Corporate Finance, Vol. 16, No. 1, Winter 2004. Available at SSRN: http://ssrn.com/abstract=554664

Contact Information

Robert M. Ames
Solazyme, Inc. ( email )
225 Gateway Blvd.
South San Francisco, CA 94080
United States
Yale Graduates Energy Study Group
New Haven, CT 06520
United States
Anthony Corridore
Lafarge Corp. ( email )
United States
Yale Graduates Energy Study Group
New Haven, CT 06520
United States
Paul W. MacAvoy (Contact Author)
Yale School of Management ( email )
920 Indian Beach Dr.
Sarasota, FL 34234
United States
941-952-1692 (Phone)
HOME PAGE: http://yalepress.yale.edu/yupbooks/book.asp?isbn=9780300121285

Yale Graduates Energy Study Group
New Haven, CT 06520
United States
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