Question

According to liberalism, if OPEC were to cut oil supplies to the United States, the long-term costs the U.S. would pay after it could change its policies to shift its energy use toward domestically-produced resources like natural gas and coal refers to its

Answer 1

The long-term costs incurred from shifting energy use to domestic resources in response to OPEC cutting oil supplies to the U.S. refer to opportunity cost. The U.S. could mitigate this by saving domestic oil, starting a Strategic Petroleum Reserve, and increasing shale oil production.

Step-by-step explanation:

According to liberalism, if OPEC were to cut oil supplies to the United States, the long-term costs the U.S. would pay after it could change its policies to shift its energy use toward domestically-produced resources like natural gas and coal refers to its opportunity cost. This cost measures the potential benefits the U.S. misses out on when choosing to invest in alternative energy resources over other economic opportunities.

In the face of such a supply cut, it might be strategic for the U.S. to start saving its domestic oil resources for when foreign supplies are interrupted and consider building a Strategic Petroleum Reserve for emergencies, as it did in 1977. Additionally, shale oil production using fracking has been increasing the U.S. domestic oil supply, potentially mitigating the impact of reduced imports.