[ This book is now available for free download at the IEA website. ]

From the foreword:

During 2004, oil prices reached levels unprecedented in recent years. Though world oil markets remain adequately supplied, high oil prices do reflect increasingly uncertain conditions. Many IEA member countries and nonmember countries alike are concerned about oil costs and oil security and are looking for ways to improve their capability to handle market volatility and possible supply disruptions in the future. This book aims to provide assistance.

A core mission of the International Energy Agency (IEA) is energy supply security. The Agreement on an International Energy Program (IEP), the treaty signed by all IEA member countries, obliges them to maintain emergency oil reserves and be prepared to draw on these under certain circumstances, such as a sudden, substantial reduction in oil supplies to world markets. This agreement also requires development of voluntary and mandatory measures for rapidly reducing oil consumption ("demand restraint") under such circumstances. As the transport sector in most OECD countries is the prime consumer of oil, this sector should be a central focus of IEA member countries’ emergency oil demand restraint programmes.

This book provides a new, quantitative assessment of the potential oil savings and costs of rapid oil demand restraint measures for transport. These measures may be useful both for large-scale supply disruptions – such as could lead to collective actions by IEA members – and for smaller or more localised supply disruptions in individual countries. Some measures make sense under any circumstances; others are primarily useful in emergency situations. A principal goal is to provide policy alternatives to measures like fuel rationing – never a good idea if it can be avoided.

Our estimates for each IEA region and for the IEA in total show that several types of demand restraint measures could provide large reductions in oil use quickly and cheaply, while helping preserve mobility options. But for these measures to succeed, countries must be well prepared and act aggressively during an emergency. The book also provides clear methodologies that individual countries can use to make their own estimates. IEA and non-IEA countries alike are encouraged to engage in such analysis and consider which policies would be best adapted to their national circumstances.

Perhaps most importantly, this book is intended to raise awareness that demand response is an important aspect in dealing with supply disruptions. Oil demand in transport is indeed very “inelastic” in the short run, but the set of measures outlined here gives countries a tool box they can draw on to help lower the duration and costs of petroleum supply disruptions.

Claude Mandil
Executive Director