[ Nippon Keidanren ] [ Journal ]
Messages from "Economic Trend", December 2006

Energy Policy in a New Era

Masaharu SHIBATA
Vice Chairman of the Board of Councillors, Nippon Keidanren
Chairman, NGK Insulators, Ltd.

Various factors dramatically boosted the price of crude oil this summer, including sudden growth in demand from around the world, particularly Asian countries, and concerns over shrinking oil reserves. Speculation was another factor driving crude oil prices to nearly 80 dollars a barrel. While prices have since dropped, they remain high. Because energy prices had remained low for some ten years leading up to this latest spike, people had come to expect a steady, untroubled supply of oil--much like water or air. In the public at large, all sense of crisis had faded.

Experience gained over the last year or two in Nippon Keidanren missions to countries such as China, India, and Vietnam clearly indicates that leaders in these nations without exception recognize the importance of securing energy supplies and improving their infrastructures. Prospects of sudden demand growth affected the oil futures market, another factor underlying the price increase. Other factors, including the trend toward what might best be described as the rise of resource nationalism and continuing instability in the Middle East, further complicate the situation.

In May of this year, Nippon Keidanren published an opinion piece entitled "Moving to establish an energy strategy for Japan." (note) In brief, the piece argued for strong political leadership to implement an energy policy for this country and to achieve an optimum energy supply balance, focusing on a nuclear energy strategy founded on cooperation between the government and the private sector and clear delegation of roles. I encourage all to read this crucial document.

We are not alone in recognizing the importance of this country's future energy policies, as evidenced by the publication by the Ministry of Economy, Trade and Industry of the New National Energy Strategy, which addresses the topic of energy security, and efforts by the Agency of Natural Resources and Energy to promote review of its Basic Energy Plan.

In contrast to the era of the oil shocks, Japan now has an industrial structure in place that is capable of withstanding fluctuations in crude oil prices. For this reason, this most recent price jump, which might best be described as an anomaly, has not resulted in widespread panic. From a certain perspective, current conditions represent an opportunity to reassess this country's energy policy. With this in mind, we are pushing to have our opinions reflected in this policy while continuing to work closely with ministries and agencies, the Japan Atomic Industrial Forum, and other organizations.

(Note) http://www.keidanren.or.jp/japanese/policy/2006/027/index.html <in Japanese>

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