International Energy Agency:
Effectiveness of Members' Oil Stocks and Demand Restraint Measures
NSIAD-89-42, Feb 6, 1989
In response to a congressional request, GAO examined the International Energy Agency (IEA) members': (1) compliance with a requirement to maintain emergency oil reserves equivalent to 90 days of oil imports; and (2) demand-restraint measures during an oil supply disruption and their effectiveness.
GAO found that: (1) although most of the member countries technically complied with the 90-day oil stock requirement, many lacked 90 days of accessible emergency oil stocks; (2) 3 of the 18 net oil importing countries did not meet the 90-day requirement as of January 1988; (3) the oil stocks IEA counted to determine compliance included a substantial amount of oil companies' minimum operating inventories, which were not generally accessible; and (4) in January 1987, member countries collectively held 89 days of accessible oil stocks but only 76 days of accessible emergency oil stocks, two members had no accessible emergency oil stocks, and nine members had 51 or fewer days. GAO also found that: (1) many countries did not have laws for penalizing oil companies that did not fulfill the mandatory requirements; (2) a large majority of the members indicated that they would rely on demand restraint as their principal response to an oil supply disruption; (3) IEA concluded that most of the members' demand-restraint programs appeared suitable; and (4) uncertainties remained concerning accurate measures of reductions due to restraints, the time it would take for the various restraint measures to become fully operational, and the cost-effectiveness of using emergency stocks or restraint measures.