DUSHANBE, April 9, 2011, Asia-Plus — Oil prices are likely to remain high for the foreseeable future and the International Monetary Fund (IMF) economists say that governments should be looking to back sustainable alternative sources of energy.
According to an analysis by the IMF, released on April 7 as part of its World Economic Outlook (WEO), global oil markets are in a period of increased scarcity.
The IMF economists consider that a persistent adverse oil supply shock would imply lower global output, higher revenues for oil exporters, a surge in global capital flows, and a widening of current account imbalances.
Oil remains the most important source of primary energy in the world, accounting for about 33 percent of the total. The two other fossil fuels, coal and natural gas, account for 28 and 23 percent. The analysis says that renewable sources of energy are in a rapid growth phase, but they still account for only a small fraction of primary energy supplies.
Despite the capacity constraints, the IMF research shows that it is premature to conclude that oil scarcity will inevitably be a strong constraint on global growth.
The IMF economist say their analysis shows that gradual and moderate increases in oil scarcity, consistent with supply projections by others, may only be a minor constraint on global growth in the medium to long term.
However, such relatively mild effects on global growth should not be taken for granted since scarcity or its growth effects could be more significant, the WEO analysis shows. Threats to oil supplies, including geopolitical risks, imply that oil scarcity could be more severe and may materialize in large and abrupt changes. The negative global growth effects would be correspondingly larger.
A persistent adverse oil supply shock would likely result in a widening of current account imbalances, creating greater instability in the global economy. The economists say this underscores the need to reduce the risk associated with growing current account imbalances and large capital flows.
The research shows two broad areas for policy action to mitigate the impact of oil scarcity: 1) given the potential for unexpected large increases in the scarcity of oil, policymakers should review whether current policy frameworks facilitate the adjustment to such events: macroeconomic policies to ease adjustment in relative prices and resources and structural policies to strengthen the role of price signals would be desirable; and 2) consideration should be given to policies aimed at lowering the risk of oil scarcity, including through the development of sustainable alternative sources of energy.
We will recall that Russia that provides the bulk of Tajikistan’s fuel imports has raised gas tariffs for Tajikistan again. By Russian government’s decree the export duty on light oil for countries that are not members of the Customs Union rises from US$244.6 to US$283.9 beginning on April 1. According to the Ministry of Energy and Industries (MoEI), Tajikistan has imported 62,012 tons of oil products from Russia over the first two months of this year; Russia accounted for 78.6 percent of Tajikistan’s fuel imports over the report period and Russian company, Gazprom, dominates the Tajik fuel market. Tajikistan also purchases oil products from Turkmenistan, Kazakhstan and Kyrgyzstan.
