IEA chief warns immediate action is needed to reduce demand as the world could well face its biggest oil supply shock in decades
Oil demand could be cut by the equivalent of power for all cars in China with 10 practical actions by governments and citizens in advanced economies in four months if fully carried out, according to the International Energy Agency’s (IEA) 10-Point Plan to Cut Oil Use released Friday.
The 2.7 million barrels per day of savings the IEA recommends could reduce the risk of a supply crunch from Russia’s war in Ukraine.
The IEA calculates reducing speed limits on highways by at least 10 kilometers per hour saves around 290,000 barrels a day from cars and 140,000 barrels a day from trucks.
Working from home up to three days a week, where possible,can cut oil use by 170,000 barrels daily and by 500,000 barrels in a week.
Car-free Sundays in cities can reduce oil demand by 380,000 barrels daily if applied every Sunday. The use of cheaper public transport, along with walking and cycling, could drop oil use by 330,000 barrels a day.
Alternating private car access to roads in large cities could reduce oil demand by 210,000 barrels per day while increasing car-sharing could reduce consumption by 470,000 barrels. Promoting efficient driving for freight trucks could result in 320,000 barrels less and using high-speed and night trains instead of planes where possible could mean cutting 40,000 barrels.
Oil use can shrink by 260,000 barrels per day by avoiding business air travel if alternative options and available, and 100,000 barrels by reinforcing the adoption of electric and more efficient vehicles.
‘These efforts would reduce the price pain being felt by consumers around the world, lessen the economic damage, shrink Russia’s hydrocarbon revenues, and help move oil demand towards a more sustainable pathway,’ the IEA said.
-Measures already tested and proven
Curbing oil use is significant in terms of reducing potential strains at a time when a large quantity of Russian supplies may no longer reach the market to cope with the approaching peak demand season of July and August.
The IEA’s latest Oil Market Report on March 16 identified the potential for a shut-in of 2.5 million barrels a day of Russian oil exports starting from April, adding that losses could increase should restrictions or public condemnation escalate. The IEA had warned a prolonged period of volatility for markets is likely.
‘As a result of Russia’s appalling aggression against Ukraine, the world may well be facing its biggest oil supply shock in decades with huge implications for our economies and societies,’ IEA Executive Director, Fatih Birol, said.
‘IEA Member Countries have already stepped in to support the global economy with an initial release of millions of barrels of emergency oil stocks, but we can also take action on demand to avoid the risk of a crippling oil crunch,’ he noted, adding that the 10-Point Plan has not come out of ‘blue’ but shows this can be done through measures that have already been tested and proven in multiple countries.
Advanced economies account for almost half of global oil demand and many of them, including the largest energy consumers, are required as members of the IEA to have oil demand restraint plans ready as part of their emergency response measures, the IEA said.
Many of the proposed actions in the plan require changes in consumer behavior, supported by government measures. However, the IEA said reducing oil demand does not depend solely on national governments.
Several of the measures can be implemented directly by other layers of government such as state, regional or local authorities or just voluntarily by citizens and corporates, enabling them to save money while showing solidarity with the people of Ukraine.
The IEA noted that reducing oil use should not remain a temporary measure because of the importance of sustained reductions, not only to improve countries’ energy security but also to tackle climate change and reduce air pollution.