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Email art icle IEA to call for an emergency oil plan By Javier Blas and Kevin Morrison in London Published: March 31 2005 22:08 | Last updated: March 31 2005 22:08 Graphic Oil importing countries should implement emergency oil saving pol icies if supplies fall by as little as 1m-2m barrels a day, the Internat ional Energy Agency will warn next month. The figure is much lower than the official trigger of 7 per cent of globa l oil supply equivalent to 6m b/d agreed in the treaty that founded the energy watchdog for industrialised countries after the oil crisis of the 1970s. A fall in supply of just 1m-2m b/d would be equivalent to the di sruptions during the 2003 Iraq war or the 2002 oil industry strike in Ve nezuela. A warning to set up demand restraint policies in the transport sector, such as driving bans or shorter working weeks, is contained in a study t o be published next month during the annual IEA meeting of energy minist ers. It comes as oil is trading at more than $55 a barrel and highlights the a gency's concern about the possibility of a supply shock, the economic im pact of high oil prices, and the need to focus on conserving energy rath er than simply encouraging higher production. The report marks a departure in IEA policy, as it says demand restraint m easures, until now confined to times of crisis, may be attractive durin g extended periods of high oil prices to relieve demand pressure. In a draft of the report circulated to governments and seen by Expansin, the Financial Times' Spanish partner, it suggests dramatic measures, such a s reducing motorway speed limits by 25 per cent, shortening the working week, imposing driving bans on certain days, providing free public trans port and promoting car pooling schemes. Such measures are being adopted in the Philippines, where civil servants will today start a compressed work week of four days, in a desperate att empt by the Manila government to cut its oil bill in the next two months . Investment in such schemes will be needed before any crisis occurs, the I EA says.
response can send a strong market signal, sa ys the report, entitled Saving Oil in a Hurry. A reduction in IEA tra nsport fuel demand of even a few per cent could have a substantial dampi ng effect on surging world oil prices. Energy prices rose on Thursday, with US petrol and heating oil hitting al l-time highs. The rise was propelled by a Goldman Sachs report that said oil pr ices may have entered the early stages of a super-spike period, which could lead to prices of $105. Claude Mandil, IEA executive director, says in the foreword of the study: There appear to be opportunities to achieve substantial reductions in transportation oil demand quickly and cheaply if countries are prepared. The Paris-based body told governments recently that if supply continu es to struggle to keep up, more policy attention may come to be directed at oil demand intensity in our economies and alternatives. The IEA says the proposals in its study could save up to 1m b/d, but ackn owledge that some of them, like car-pooling or driving bans according to number plates, are difficult or costly. The IEA plans to publish anothe r study on the matter, titled Saving Electricity in a Hurry, in July.
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