IEA’s influence will weaken as Asia rises, says former chief Tanaka

Nobuo Tanaka seems to enjoy speaking more freely now that he’s no longer head of the International Energy Agency. In that role, reporters would parse his every word for clues about possible movements in oil prices and supply.

On October 31, during Singapore’s International Energy Week, Tanaka proclaimed on a range of issues in a way he almost certainly would have avoided when he was executive director of the west’s energy watchdog.

He said:

• The IEA should manage emergency stockpiles more liberally and with an eye on rising prices to prevent economic downturns.
• Oil prices at $100/barrel will “certainly derail the economic growth of all countries.”
• If oil stays above $100/barrel, the next global downturn “will be as bad as 2008.”

Tanaka also warned that the IEA’s influence would shrink alongside Asia’s growing appetite for energy. At the same time, the region must get a handle on its own oil security, he said, singling out Japan, China and Korea for not doing enough in this area.

He urged Asia to develop strategic stockpiles and figure out how to manage them, either by joining the IEA or by creating a counterpart organization for Asia.

“Petroleum sector price security is a 20th century security,” he said. “The IEA was created for that. But 21st century security is probably different. Do we need to change the IEA or create something else? What Asia should do?”

While the IEA emerged from the 1970s oil shocks as a challenger to OPEC, Tanaka said a confrontational model might not work for Asia. Many of the region’s energy ministers already get together every year to talk about issues that face both consuming nations and producing ones. Tanaka suspects that sort of cooperation would work better in this part of the world.

“It’s up to Asian countries,” Tanaka said. “How do they think of the energy security of the region? Because there are plenty of implications. Growth of economy happens here, demand for energy happens here. It is quite legitimate that Asian countries may decide different options than the IEA.”

If oil security was a concern during the past decade, what will take its place?

“Oil is getting less and less important in the total energy supply,” Tanaka said. “Now the issue is how we supply electricity. So, 20th century energy security is oil supply security, but 21st century security could be stabilized, stable supply of electricity using different sources: coal, oil, gas, renewables, nuclear, hydro, and design the market in the new technology like smart grid.”

Platts