Will petroleum help during Global Energy Crisis?
Imagine you are in an era where major countries of the world are facing an acute shortage of mineral resources especially fossil fuels. What do you think the heavyweight economies would do?
It is pretty obvious to guess that developed countries might have completely switched to renewable sources beforehand, but what about the developing countries? They might still be in the transition state. How will they get fuel to run their economies?
It’s important to understand the term energy crisis before we jump into the crux of the article :).
The world has faced an energy crisis over a dozen times in the past 100 years. One of the first energy crisis was the 1973 oil crisis. During the 1970s the tension in the Arab countries was significantly rising. Israel declared itself as an independent country in 1948 and but the Arab states didn’t acknowledge it. And since then they have been resistant to Israel’s progress.
Now during a war, it is obvious that when two nations are engaged, there would be other nations assisting. In October 1973, the members of O.P.E.C which stand for Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo/trade ban and all the nations that were supporting Israel during the Yom Kippur War of 1973. This in turn led to a world economic crisis in 1973.
Yom Kippur is the holiest day of the year in Judaism. It is also known as the Day of Atonement.
The OECD (Organization for Economic Co-operation and Development) was formed in 1961 to focus on economic issues of the world. It has 37 member countries.
After the 1973 crisis, the International Energy Agency (IEA) was formed in 1974 with HQ in Paris under OECD which would assist the countries in case of any future oil crisis.
There are 30 members of IEA and 8 associate members of IEA. India became an associate member of IEA in 2017. Under the International Energy Program, each member country is expected to maintain emergency oil stocks equivalent to at least 90 days of net oil imports.
Similarly, our next crisis took place in the year 1990. Kuwait has one of the largest oil reserves holding around 7 percent of the world’s oil. In the 1990s Iraq invaded Kuwait (fellow OPEC member) under the leadership of Saddam Hussein.
Despite the intervention of UNSC (United Nations Security Council) dictator Hussein refused to withdraw the troops. This also led to another crisis.
The crisis in the 2000s then in 2008, we have seen that the road has been full of bumps when it comes to supply and demand of energy.
So how will a country ensure that it doesn’t get much affected when the oil prices crash? Savings!
We all have heard about banks, haven’t we? What is our prime purpose when we go to a bank? To deposit our money so that we can withdraw it in the future at the time of need.
Similarly, we have petroleum reserves where we can store our petroleum and withdraw the required amount when required. This becomes very helpful to tackle the high price fluctuations in the market.
Strategic petroleum reserves are huge reserves that store tons of crude oil to deal with any oil crisis or during any natural calamity that may disrupt the oil supply. They could be held by the government or even a private industry in a country.
The US has the largest emergency oil reserves in the world holding millions of tons of oil.
India also has its own oil reserves. The construction of these oil storage facilities in India is managed by Indian Strategic Petroleum Reserves Limited (ISPRL). ISPRL is a subsidiary of the Oil Industry Development Board (OIDB).
The current oil reserves in India are located at Padur (Karnataka) which holds the maximum capacity of oil, Mangaluru (Karnataka), and Visakhapatnam (Andhra Pradesh).
There are 1.65 trillion barrels of proven oil reserves in the world as of 2016.
You can even check the total oil left in the world by visiting here.
Fun Fact: With our current oil consumption, the world has only around 47 years of oil left.
I would like to thank my readers for dropping here. I hope the time you spent reading my article has been fruitful.😊