From Opinions Desk

The International Energy Agency has set out a range of demand-side actions that governments, businesses and households can take to alleviate the economic impacts on consumers of the disruptions to oil markets stemming from the war in West Asia.

The conflict has triggered the largest supply disruption in the history of the global oil market, with shipping through the Strait of Hormuz, which normally carries around 30% of global oil consumption, reduced to a trickle. Around 20 million barrels per day of crude oil and oil products typically transit the Strait. The loss of these flows has tightened markets significantly, pushing crude oil prices above USD 100 per barrel and driving even sharper increases in refined products such as diesel, jet fuel and liquefied petroleum gas (LPG).

Restoring transit through the Strait of Hormuz remains essential to stabilise global energy markets. In the meantime, countries are acting on both supply and demand. On 11th March, IEA Member countries agreed to release 400 million barrels of oil from emergency reserves – the largest stock draw in the Agency’s history. However, supply-side measures alone cannot fully offset the scale of the disruption. Addressing demand is a critical and immediate tool to reduce pressure consumers by improving affordability and supporting energy security.

A new IEA report identifies ten measures that can be implemented quickly by governments, businesses and households. These actions focus primarily on road transport, which accounts for around 45% of global oil demand, but also cover aviation, cooking and industry. Widespread adoption, where possible, would amplify their global impact and help cushion the shock.

“The war in West Asia is creating a major energy crisis, including the largest supply disruption in the history of the global oil market. In the absence of a swift resolution, the impacts on energy markets and economies are set to become more and more severe,” said IEA Executive Director Fatih Birol. “As the global energy authority, the IEA is doing everything we can to support the stability of energy markets. We have recently launched the largest ever release of IEA emergency oil stocks – and I am in close contact with key governments around the world, including major energy producers and consumers, as part of our international energy diplomacy. In addition to this, today’s report provides a menu of immediate and concrete measures that can be taken on the demand side by governments, businesses and households to shelter consumers from the impacts of this crisis. It draws on the IEA’s decades of expertise in this field and highlights measures that have been proven to work in practice in different contexts. I believe it will be of use to governments around the world, in both advanced and developing economies, in these challenging times.”

Immediate actions to reduce demand –

1. Work from home where possible
Displaces oil use from commuting, particularly where jobs are suitable for remote work.

2. Reduce highway speed limits by at least 10 km/h
Lower speeds reduce fuel use for passenger cars, vans and trucks.

3. Encourage public transport
A shift from private cars to buses and trains can quickly reduce oil demand.

4. Alternate private car access to roads in large cities on different days
Number-plate rotation schemes can reduce congestion and fuel-intensive driving.

5. Increase car sharing and adopt efficient driving practices
Higher car occupancy and eco-driving can lower fuel consumption quickly.

6. Efficient driving for road commercial vehicles and delivery of goods
Better driving practices, vehicle maintenance and load optimisation can cut diesel use.

7. Divert LPG use from transport
Shifting bi-fuel and converted vehicles from LPG to gasoline can preserve LPG for cooking and other essential needs.

8. Avoid air travel where alternative options exist
Reducing business flights can quickly ease pressure on jet fuel markets.

9. Where possible, switch to other modern cooking solutions
Encouraging electric cooking and other modern options can reduce reliance on LPG.

10. Leverage flexibility with petrochemical feedstocks and implement short-term efficiency and maintenance measures
Industry can help free up LPG for essential uses while reducing oil consumption through quick operational improvements.

Perspective

While these recommendations from IEA are well intentioned and effective to a large measure, there are some problems in following some of these measures. Switching to other modes of transport is very well taken, but even most other modes of transport use some or other form of oil and gas. However, using public transport as a way of life is highly recommended.

Cooking on electricity is not always feasible in many countries such as India, where electricity is not always available in many parts of the country. Further, electric cooking is very expensive and most of the population can’t afford it. In small towns and in villages they can switch to cooking on wood and coal and on cowdung cakes – traditional fuels that they never completely abandoned. But in large densely populated cities, cooking on smoke generating fuels is not feasible and electricity as said earlier, is not always there and is expensive.

In completely imported oil and gas dependent countries like India, the only short term quick way out seems to be to get oil and gas from other countries such as Oman to get out of the crisis and to seriously develop green energy infrastructures in every aspect of life to meet the 2030 target anyhow. Increasing hydroelectric power must be seriously pursued in addition to other forms of green energy.

See also this link.