From The Yomiuri Shimbun, March 16
=== Use oil reserves wisely
There seems to be no end in sight to the upward trend in world oil prices. Oil futures in New York are hovering above the 35 dollars a barrel mark--the highest level since the Gulf crisis of 1990.
Unusually high oil prices are casting a dark pall on the world's economic outlook.
Both oil producing and consuming countries must strengthen their cooperative ties and do their utmost to stabilize crude oil prices.
At its general meeting last week, the Organization of Petroleum Exporting Countries decided to keep its production quota of 24.5 million barrels a day intact for the April-June quarter, a period of slackening demand.
OPEC also made clear it would implement an extraordinary production increase should the United States and other countries launch military strikes on Iraq and oil prices skyrocket.
In doing so, OPEC countries took the world economy into consideration, although its members failed to agree on temporarily lifting a production quota. Its response can be considered an adult one.
Various factors have conspired recently to jack up oil prices--the tense situation over Iraq, the general strike in Venezuela, and a cold snap in the Northern Hemisphere.
The New York market took the possible decline in the U.S. oil reserve due to the latest OPEC decision seriously and buy-orders prevailed.
=== Widespread economic impact
If crude oil prices keep rising, the U.S. economy will inevitably slow down as private consumption will slacken and businesses will see profits drop due to higher energy costs.
And a U.S. economic contraction will affect not only Japan and other Asian countries but also the oil producing countries.
It was during the Yom Kippur War in 1973 when OPEC launched an oil embargo and triggered the first oil crisis. In the 30 years that have since passed the oil supply-demand situation has changed markedly.
Back then, oil accounted for 74 percent of Japan's primary energy source supply. In fiscal 2001, it accounted for only 49 percent, thanks to the nation's efforts to become less dependent on oil, causing nuclear energy, which accounted for less than 1 percent 30 years ago, to now account for 13 percent of the annual energy supply.
Even if crude oil imports drop markedly, Japan today has oil reserves worth 171 days of net imports, when public- and private-sector reserves are combined.
=== Diversification
On the other hand, the nation's dependency on crude oil imports from the Middle East has risen to 88 percent from 78 percent.
There are also other concerns--not seen during the first oil crisis--that Asian economies such as China, South Korea and Thailand have rapidly increased crude oil imports, while lacking sufficient emergency oil reserves.
Japan's need to further diversify its oil import sources is emerging as a mid- and long-term issue, as it urges its neighbors to expand their oil reserves.
These efforts, however, will not help ease the current high oil prices. The only thing to do, for now, is hope Venezuela's oil production returns to normal, while Saudi Arabia, with its extra production capacity, increases its output.
Oil consuming countries, including Japan, must make effective use of their oil reserves.
It is also a matter of urgency that the nation's nuclear power plants, whose safety has been confirmed through inspections, resume operation.