Oil import fees with exemptions

Abstract

This paper reviews and quantifies arguments for and against oil import fees. It concludes that expected exemptions from the fee imply that net economic costs to the U.S. of a fee would exceed economic benefits. In addition, welfare losses from a large fee would greatly exceed losses normally associated with instruments designed to raise tax revenues. Coupled with the noneconomic assessment, the economic analysis suggests that the adoption of an oil import fee would be poor public policy.