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Could there be negative impacts to reducing the quantity demanded of fossil...

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sj83 | Valedictorian

Posted July 17, 2013 at 12:37 AM via web

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Could there be negative impacts to reducing the quantity demanded of fossil fuels?

Imagine that oil suppliers suddenly or gradually lost 25% of the demand for their product. In other words, 25% of the demand becomes zero demand.

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Kay Morse | College Teacher | (Level 1) Senior Educator

Posted July 17, 2013 at 10:43 PM (Answer #1)

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One way this scenario of reduced demand might occur is through fossil fuel consumption reform in which costly fossil-fuel subsidies were cut. This reform might have implications on the import and export exchanges. In net importing countries (like the U.S.), imports and spending on imports would be reduced, thus sparking a negative effect in import-related industries. In net exporting countries (like OPEC countries), the removal of subsidies would open export capacity but may threaten non-energy sectors of the economy with negative effects ("Joint report by IEA, OPEC, OECD and World Bank on fossil-fuel ... subsidies" Prepared for G20 Meeting of Finance Ministers).

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Kay Morse

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