A Contribution to Reduce Oil Consumption

MA-Thesis / Master von Sebastian Veit

Abstract:

Unlike industrialized countries, the recent rise in oil prices has had a severe negative impact on the economies of oil importing developing countries. Conventional strategies and models to reduce oil dependence, which have been implemented in the powerful „northern” economies, are often not feasible for developing countries due to high technological costs or unsuitability. Furthermore, oil reserves will deplete and consequently world market prices will climb, rather than decline over the next decade. Therefore, I propose that cross-sector strategies have to consider socio-economic circumstances of developing countries. The strategies I suggest do not rely on conventional methods such as coal, gas, nuclear or renewable energy.

My research further identifies variables on which national policies can be implemented in order to contribute to a reduction of global oil consumption. To this end, I have followed a quantitative and qualitative approach:

Preliminary quantitative analysis: This demonstrates that some developing country economies are more vulnerable to oil price shocks than others. This can be measured by the ratio of the value of net oil imports to GDP.

Qualitative analysis of cross-sectoral strategy: This polarizes methods applicable to industrialized countries on one hand, and solutions that work in the socio-economic circumstances of developing countries on the other. Potentials to contribute to a reduction in the oil consumption are identified in the education, agriculture, urban planning and transportation sector. In the transportation sector, data for engine idling was considered scientifically for the first time.

The framework of policy analysis is used in the study to develop a general strategy to enter into a policy dialogue at the national level. Various examples are also used to this end.

Baken’s ESMAP study (2005) had concluded that in the near future there is little prospect for African countries to reduce their import dependence on oil. My research further finds that gains in fuel savings can be 10–15 % from eco-driving campaigns, 2–5 % from tire inflation policy, 2–5 % from idling campaigns. Further reduction can be brought about by changes in the mode of transport (autos instead of cars) as well as increased urban „walkability”. Education for private housing efficiency and boosting agricultural production in biomass and bio fuels are some other steps. The research also reveals substantial potential for refurbishment of existing power plants and reduction of transmission and distribution losses (both, commercial and technical). In conclusion, several cross-sector options that link the overall goal of reducing the oil consumption with non energy sectors are explored. An inter-disciplinary approach addresses best alternative options for developing countries for fueling their economic progress.

Table of Contents:

Text Sample:

Chapter 3.4: Energy and Agriculture It is important to note the significance of the relationship between agricultural production and oil demands. The cost of fertilizer has roughly doubled since 2004 due to drastic oil price increases. In his recent article, ‘The Energy Cost of Agriculture’, Campbell (2005) explores the impact of high oil prices on the sector.

He draws the following correlation: „Agriculture uses a great deal of oil and gas to fuel the tractor, transport the produce, provide pesticides, synthetic nutrients and pump irrigation water. … It is not however as simple as it seems because the high price of oil and gas is mainly profiteering from shortage, as actual production costs have not changed materially. The money secured from profiteering flows back into a world economy to the benefit of those that control the financial system and world trading currency. Among the worst hit are small-scale farmers in developing countries.

Agriculture will be affected in two ways: by direct energy cost increases (i.e. fuel, heating, and air conditioning) and by indirect energy costs increases, typically the manufactured inputs, which include pesticides, fertilizers, fuels and oils, and electricity costs to the farm sector. The production of fertilizers is indirectly linked to increased oil and gas prices. The basic raw material for fertilizers is ammonia, which is produced with the Haber-Bosch Catalytic process. This is an industrial method for making ammonia from nitrogen and hydrogen. It is the most important source of ammonia for use in the chemical industry, especially for the manufacture of fertilizers. This process requires vast amounts of energy for heat and natural gas to produce hydrogen. Hence, as energy prices rise (oil and gas), the price of fertilizers will continue to rise as a consequence.