Henderson's main conclusions are incorrect. Oil is a fungible substance, and therefore price discrimination is not possible. (Some argue, however, that there is evidence the world oil market is segmented, and that a degree of price discrimination therefore is possible; Weiner, 1984). Consequently, a variable import fee (VIF) imposed on imported oil will shield the US economy from short-lived price collapses, as intended - and at the same time garner modest revenues for the Treasury.
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