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ENERGY AND SUSTAINABLE DEVELOPMENTENERGY AND SUSTAINABLE DEVELOPMENT

Impact of the Oil ShocksImpact of the Oil Shocks

Cristina Mocci Cristina Mocci Italian Ministry of Economy and FinanceItalian Ministry of Economy and Finance

[email protected]@tesoro.it

UNESCOUNESCORome, 2006 19Rome, 2006 19thth June June

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Cristina Mocci – Impact of the Oil Shocks

Impact of the Oil Shocks

Outline

1. World oil demand and supply2. Oil price trends and volatility3. EU energy policies4. Policy interventions on demand/supply side


World oil demand and supply

Impact of the Oil Shocks (1) – World oil demand and supply Impact of the Oil Shocks (1)


Sources: IEA, British Petroleum Review, Oil and Gas Journal, IMF calculations

Main Oil Producers, 2003


Global Oil Demand, 1971-2004

Global Oil Demand and Real Oil Price, 1971-2004

Sources: IEA and IMF calculations


Source: IEA and IMF calculations

Consumption by Countries and Regions, 2004


China’s Oil Demand Forecast through 2030

Source: World Energy Outlook 2004, IEA

China’s Oil Demand Forecast through 2030


USA Dependence on Imported Oil, 1970-2025

Source: Annual Energy Outlook 2004, IEA

USA Dependence on Imported Oil, 1970-2025


Countries Mtons Variations (%)

Saudi Arabia 14,54 39,5

Angola 11,46 25,1

Iran 9,81 6.09

Russia 7,89 15,3

Oman 7,25 -35,4

Sudan 4,32 7,5

Yemen 4,22 29,2

Congo 3,23 13,2

Equatorial Guinea 2,60 6,7

Indonesia 2,53 2,7

Oil Supply of China, 2005

Source: General Administration of Customs of China

Oil Supply of China, 2005


Country Imports (milb/d)

Iraq 0,470

Kuwait 0,205

Saudi Arabia 1,724

United Arab Emirates 0,010

Total 2,409

USA Imports from Persian Gulf countries, 2003

Source: EIA, Monthly Energy Review, March 2004

USA Imports from Persian Gulf countries, 2003


Sources: IEA, British Petroleum Review, Oil and Gas Journal, IMF calculations

Proven Oil Reserves, end 2003


Crude Oil Dependence

8166

-106

39

99

-150

-100

-50

0

50

100

150

EU UnitedStates

CEI China Japan

%

Source: GLOBALSTAT, ENERDATA

Crude Oil Dependence


Oil Intensities in Selected Countries and Regions, 1970-2004

Oil Intensities in Selected Countries and Regions

Sources: IEA, OECD analytical database, IMF calculations


GDP by Sector - Italy, 2004-2030

0

200000

400000

600000

800000

1000000

1200000

2004 2010 2015 2020 2025 2030

M€

Industry

Transport

Residential

Services

Agricoltural

Source: Ministry for Productive Activities methodoligy, Italy

GDP by Sector- Italy, 2004-2030


Oil Intensity by Sector - Italy, 2004-2030

0,00

20,00

40,00

60,00

80,00

100,00

120,00

2004 2010 2015 2020 2025 2030

kto

e/€

Industry

Transport

Residential

Services

Agricoltural


Oil Intensity by Sector-Italy, 2004-2030


Final Consumption - Italy (Ktoe)

0100002000030000400005000060000

2004

2010

2015

2020


Final Consumption – Italy (Ktoe)


Impact of the Oil Shocks (2)

Oil price trends and volatility

Impact of the Oil Shocks (2) – Oil price trends and volatility


Brent crude oil prices, 1970-2004

Sources: IMF and Bloomberg

Brent crude oil prices, 1970-2004


W orld, Energy, Oil, Close, USD

Brent Crude Futures 1-Pos, IPE Brent Crude Futures 5-Pos, IPE

Brent Crude Futures 18-Pos, IPE Brent Crude Futures 12-Pos, IPE

Source: EcoWin

gen01

apr lug ott gen02

apr lug ott gen03

apr lug ott gen04

apr lug ott gen05

apr lug ott gen06

Pric

e

10

20

30

40

50

60

70

Futures Price of Oil 1, 5, 12, 18 Position, 2001-2005

Source: Ecowin

Futures Price of Oil 1, 5, 12, 18 Position, 2001-2005



Sources: IEA and IMF calculations



OPEC Excess Capacity and Price

Sources: IEA, US DOE, IMF calculations


Oil Price and Industry Price - Italy

0

100

200

300

400

500

600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Monthly values in 2004-2005

Oil price

Industrial price

Industry price linear

Oil price linear

Source: Quaderno dei prodotti petroliferi, MEF

Oil Price and Industry Price-Italy



EU energy policies

Impact of the Oil Shocks (3) – EU energy policies


Role of oil in the EU

Role of oil in the EU

37 per cent of EU energy sources

0,6 per cent of world’s oil proven reserves

Which policy ?


General objectives

Reduce oil consumption– Improve energy efficiency– Diversify energy sources– Develop new technologies

Reduce the shortage risk– Geographical supply diversification– Reduce political instability– Improve strategical reserves

General Objectives


European Law

Directive 2001/77/ECPromotion of electricity from renewable

energy sources Directive 2003/30/EC

Promotion of bio and renewable fuels for transportRegulation (EC) No 1228/2003

Cross-border exchange in electricityCommission Recommendation (various)

Agreements with ACEA, JAMA, KAMA to improve cars fuel economy


Impact of the Oil Shocks (4) – Policy interventions on demand/supply side

Policy interventions on demand/supply side



Supply Side InterventionsShort term

Better use of existing oil reserves (IEA Agreement – EU Regulations)

Improve transparency on oil data related to strategic stocks and reserves (JODI)

Long term

Larger investments in exploration, drilling, refining and transport


Demand Side InterventionsShort term

Behavioural changes in mobility giving several alternatives to citizens

(see IEA-OECD, Saving Oil in a Hurry, Paris, 2005)

Long termIncrease use of alternative fuels


Additional Policy Options Short run

Technology improvement in the transport sectorSocial policies in favour of lower income

household

Medium-Long runStrengthening of co-operation with

producer countries Develop alternative renewable sources at competitive prices


What about the future?Some questions

• Are oil forecasts more reliable than the haruspex’s prophecies ?

• Are oil reserve data reliable ?• What is the problem ? Lack of refining and transport

infrastructures or production capacity (or both) ?• Will be oil production able to meet the demand of

new economies at a low price ?• “Peak-oil theory” or a temporary trouble ?

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