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Since 1974, keeping a close eye on oil

© OECD/IEA, 2012

As long as the world relies on oil, the IEA will be on the cutting edge of monitoring it

26 September 2012

This article appears in the latest issue of IEA Energy: The Journal of the International Energy Agency.

By IEA Executive Director Maria van der Hoeven

Since the International Energy Agency was founded 38 years ago, its mandate has expanded beyond the initial focus on oil security. The IEA champions a broader form of energy security, its core concern, not just by guaranteeing oil reserves and other safeguards against supply disruptions but by working to reduce dependency on oil overall and oil imports in particular. From climate concerns to geopolitical risk, the best ways to build a secure and reliable future are to improve efficiency and to shift to a sustainable low-carbon energy system.

But until we attain that goal, oil remains central to energy security. By providing authoritative data and analysis to member countries and the world at large, the IEA enhances market transparency as well as understanding among policy makers – both of which make the world’s oil supply more secure. At the same time, the Agency stands ready to respond to oil supply disruptions.

Indeed, IEA coordination of emergency response among its member countries is a unique responsibility. The response system for oil supply emergencies includes a varied toolbox, and the processes for identifying disruptions and carrying out emergency actions are regularly practised and improved by Emergency Response Exercises. These steps are designed to mitigate the consequences of acute and severe oil supply shortages by making additional oil available to the global market. Emergency response measures include both increasing supply and reducing demand. Member countries’ emergency preparedness is peer-reviewed on a rotating cycle, and key recommendations are delivered to governments for consideration and implementation.

The news media tend to focus on the power of member countries to tap their emergency  stocks during a disruption – and while there have been only three IEA collective actions in the Agency’s history, governments stand ready to act when member countries collectively agree on such a course of action.

But the IEA is continuously engaged to improve oil security, through its emphasis on diversification of energy sources and development and promotion of alternatives and through its emergency preparedness work and its expert oil market analysis – including the monthly Oil Market Report. This monitoring is one aspect of the Agency’s larger mission to promote energy security across the board. By encouraging the use of new and lower-carbon sources of electricity, by setting targets for energy efficiency, by encouraging research and policy to foster technologies from electric vehicles to carbon capture and storage, the IEA contributes to energy-supply security and reduces dependency on oil imports in general. The most secure barrel of oil will always be the one we don’t use.

One vital way the IEA brings greater stability to energy markets is through international engagement. The Agency fosters ongoing dialogue and co-operation with oil producers, particularly in the context of the Producer-Consumer Dialogue with OPEC and participation in the International Energy Forum. But it also engages closely with major non-member consumers on issues of oil security and emergency response. India this year joined Thailand as the first non-members to host IEA Emergency Response Exercises tailored for their own needs. Such engagement can help prepare those partner countries to analyse national or regional emergencies and respond effectively, or possibly to take part in global collective actions on a voluntary basis. Both also participated in the 2010 joint Emergency Response Exercises in Paris for IEA members, together with Chile, China, Croatia, Estonia, Indonesia, the Philippines, Slovenia and South Africa.

In order to continue to contribute effectively to market stability and energy security, the IEA itself must show flexibility and embrace change. By forging close international relationships, by expanding the concept of energy security and by confronting the intertwined challenge of energy sustainability, the IEA can provide dynamic solutions to protect its members and the global economy from energy insecurity.

The International Energy Agency (IEA) produces IEA Energy, but all analysis and views contained in the journal are those of individual authors and not necessarily those of the IEA Secretariat or IEA member countries, and are not to be construed as advice on any specific issue or situation.

Maria van der Hoeven recently completed her first year as Executive Director of the International Energy Agency, where she has worked to promote the Agency’s effectiveness in global energy security. Before taking over the helm of the IEA in September 2011, she served as Minister of Economic Affairs for the Netherlands from February 2007 to October 2010, during which time she demonstrated leadership on energy policy at the national, regional and global levels.