Abstract
Stochasticsimulationofthedirecteconomiccostsofoildependenceinanuncertainfutureisproposed
as ausefulmetricofoildependence.Themarketfailurefromwhichthesecostsariseisimperfect
competitionintheworldoilmarket,chieflyasaconsequenceoftheuseofmarketpowerbythe
OrganizationofthePetroleumExportingCountries(OPEC)cartel.Oildependencecostscanbe
substantial.ItisestimatedthatoildependencecoststotheUSeconomyin2008willexceed$500
billion.Othercosts,suchasmilitaryexpendituresorforeignpolicyconstraintsaredeemedtobelargely
derivativeoftheactualorpotentialeconomiccostsofoildependence.Theuseofquantifiableeconomic
costs asasecuritymetricleadstoameasurabledefinitionofoilindependence,oroilsecurity,whichcan
be usedtotesttheabilityofspecificpoliciestoachieveoilindependenceinanuncertainfuture.