Oil Security, Short- and Long-Term Policies

This analysis looks at international policy measures in response to emergency oil shortages and the Commission’s proposal for improving emergency stock management in the EU.

Abstract

This publication, part of the INDES Working Paper Series, originates from the project “Insuring against Disruptions of Energy Supply – Managing the Risks Cost- Effectively” (INDES). INDES has been a one-year joint research project under the initiative of the Centre for European Policy Studies (CEPS) together with the Energy research Centre of the Netherlands (ECN) and the Fondazione Eni Enrico Mattei (FEEM). The project was supported by the Fifth Framework Programme and funded by the European Commission Directorate-General for Energy and Transport.

The INDES project focuses on market-compatible, cost-effective security of supply responses by the European Union. Security of supply is understood as insurance against risks, in which responsibility is shared between the EU, member states, energy companies and customers. Thus security of supply is seen as an economic risk-management strategy. Critical to such an approach is first the minimisation of the insurance ‘premium’ to achieve the degree of security that is politically called for. Second, there is a need to identify the best systemic actor able to ‘hedge’ the risk. This can be governments, companies, consumers or in some cases, the market itself subsequent to careful design. Based on these premises, INDES research has emphasised two areas: i) costs of energy supply disruptions and ii) costs of potential policy responses. Towards this end, robust methodologies to assess costs and a sound empirical basis for cost data were used as the precondition for informed policy choices reflecting both effectiveness and cost-efficiency. Following this work, INDES research sought to identify the appropriate market-compatible instrument and the associated actors that would convey the process, be they governments, companies or consumers.

INDES has operated around three axes. The first was academic workshops that developed and refined the methodological framework and empirical base. The second was stakeholder workshops that presented and discussed findings with policy-makers and other stakeholders. The third axis has been the promotion of publications – both academic and policy-relevant – that aim at participating in the existing academic debate and influencing policy-makers. For more information on the project and the series of working papers, visit the INDES website at

http://www.energymarkets.info/indes/index.html.

Valeria Costantini and Francesco Gracceva are both at the Fondazione Eni Enrico Mattei (FEEM).

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