The threat of another major increase in OPEC crude oil prices this week has awakened the fears of the world's third largest industrial nation, Japan.
The threat of another major increase in OPEC crude oil prices this week has awakened the fears of the world's third largest industrial nation, Japan. The country absorbs about 12 percent of the annual Organisation of Petroleum Exporting Countries' crude oil.
SYNOPSIS: Despite frantic efforts to diversify its source of energy in the last three years, Japan is still overwhelmingly dependent on oil. Oil, in fact, accounted for 74 percent of the nation's total energy consumption last year -- and it will probably remain at that level for at least the next ten years. The nation's economy consumes an estimated 4.28 million barrels of crude oil a day. And nearly all that oil has to be imported. Japan imported a staggering 262, 785,000 kilo-litres of crude oil last year. Of that amount, 89.2 percent came from the OPEC countries.
The economic recession that followed the 1973 OPEC price increase has proven to be costly lesson to the Japanese economy. Japan is trying to steer away from its near total dependence on OPEC oil. But its plans to generate alternative sources of energy can only be achieved on a long term basis. Japan has also been encouraging imports of Chinese oil. But because these imports are dictated by political as well as economic considerations, Chinese oil is not expected to contribute more than four percent of total imports.
Japan's desperate situation is underlined by the fact that it has no known oil resources of its own. However, efforts are constantly being made to remedy the situation. Drilling continues night and day in Japan's northernmost main island of Hokkaido. Since 1969 the Japan Petroleum Exploration has spent over 160 million dollars (US) in its relentless search. Inspite of the failures, the quest continues.
So Japan has to rely on OPEC oil at least for the next ten years. It paid a total of 19,643 million dollars (US) to the OPEC oil producing countries last year. And if the Qatar meeting results in a price increase of 10 percent, Japan's Ministry of International Trade and Industry estimates the nation's bill will increase by as much as 2 billion dollars (US)