The Asahi Shimbun: OPEC deal fresh reminder
of the need to find new energy sources
“Clean energy may save you money on your electric bill, but it still won't wash your dishes.” — Yasha Harari
The Organization of Petroleum Exporting Countries (OPEC) recently reached an agreement on crude oil production cuts, the first such deal in eight years.
The Nov. 30 move is aimed at propping up oil prices, which have fallen sharply in the past two years.
Oil-producing countries that are not OPEC members, such as Russia, are also expected to cooperate with the effort to some degree.
While it remains to be seen whether the output cuts will actually be implemented under the terms of the agreement, financial markets immediately reacted to OPEC's decision by pushing oil prices higher.
The oil producers were under strong pressure to slash production as lower crude prices depressed their revenues, placing them in a fiscal bind.
Given the circumstances, this latest move puts the spotlight on OPEC for the first time in many years.
Clearly, however, the oil cartel no longer has the kind of clout on the global oil market that it had when it caused oil crises in the 1970s. Its ability to control oil prices is limited.
That is due in great part to the prospect that higher oil prices will lead to increased production of shale oil in the United States.
U.S. President-elect Donald Trump's pledge to ease regulations on shale oil drilling reinforces that view.
OPEC's agreement has not only raised oil prices, but also stock prices.
Stock prices are on the rise due to expectations the deal will improve the investment environment by infusing new energy into the economies of oil-producing nations and, thereby stabilizing oil prices.
If a virtual cycle for the world economy emerges and takes hold, the Japanese economy will also benefit from the trend.
But the fact remains that the Japanese economy depends on oil for 40 percent of its energy consumption, and Japan imports almost all the oil it consumes.
As it pushes up gasoline prices, a rise in oil prices in itself is a negative economic factor.
With few analysts predicting a sharp uptick in crude prices, there is no need to panic. But the OPEC agreement has underscored afresh the need for calm and steady efforts to reduce this nation's dependence on oil.
Not all alternative energy sources that can replace oil should be the options, of course.
Nuclear power generation, for instance, is beset by problems concerning safety and the need to dispose of radioactive waste, as shown dramatically by the triple meltdown at the Fukushima No. 1 nuclear power plant triggered by the earthquake and tsunami disaster in 2011.
Thermal power generation using coal has the disadvantage of increasing carbon dioxide emissions.
Expanding the consumption of liquefied natural gas (LNG), which is seen as a potential major alternative to oil for the time being, would require greater efforts to lower purchasing prices.
From the medium- and long-term perspective, it is vital to step up efforts to enable the economy to gain energy mainly from renewable energy sources like wind and solar power.
What should not be forgotten is the importance of curbing energy consumption.
The 2011 disaster has led to widespread efforts in Japan to save power consumption. But there is still much room for greater energy conservation.
It is crucial to develop and popularize new energy-saving technologies like a system for achieving efficient control of power consumption by connecting equipment and power grids through the Internet.
The gas mileage of automobiles, which account for a large portion of overall oil consumption, can also be improved further.
A wide range of measures should be taken to make the nation's economy and society insulated from the effects of changes in oil prices.
--The Asahi Shimbun, Dec. 3
The Asahi Shimbun is widely regarded for its journalism as the most respected daily newspaper in Japan. . Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by The Asahi Shimbun on December 3, 2016. Petroleumworld reprint this article in the interest of our readers. Link to original article .
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Petroleumworld News 12/05/2016
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