Demand Restraint Measures

The IEA’s emergency responses are not limited to releasing oil stocks, but can also include measures to reduce oil consumption.

The Agreement on an International Energy Programme, the IEA’s founding document, requires all Member countries to maintain demand restraint measures sufficient to temporarily reduce normal oil consumption by up to 10% in an emergency.

However, simply having demand restraint measures on the books does not guarantee that these will be effectively implemented and that oil use will automatically decline. Well-organised planning and preparation is indispensable.
 
Demand restraint measures mostly target the transport sector, because that’s generally where most oil is consumed. But they can be effective in other sectors too. Where oil is used for heating residences, consumption can be substantially reduced through public campaigns to encourage turning down the thermostat a few degrees during the winter. When industry sector uses oil for processes or power, limits on operating times can reduce consumption.

Measures can be light-handed, such as encouraging people to drive less, to carpool or to drive more efficiently. Or at the other end of the spectrum, governments can impose oil rationing or allocation, or limit or even outright ban driving.

Some measures have higher potential than others, and some can be implemented faster than others. Governments are encouraged to carefully monitor the impacts of these measures and to regularly assess their effectiveness.

The following list provides an overview of the existing and specific demand restraint measures in place in IEA member countries. 

Austria has carried out a comprehensive study to estimate the volumetric savings from a broad range of demand restraint measures. The study examines the expected impacts of three categories of measures: light, medium, and heavy-handed.

Light-handed measures would include public information campaigns and appeals for voluntary energy savings, targeted at the transport, industry, commercial and residential sectors. These include:

Reduced driving speed;

• Promotion of carpooling;
• Control of tyre pressure;
• Increased use of public transportation facilities;
• Reduction of short distance driving;
• Reduction of room temperature in households and public buildings;
• Control of burner adjustment for oil heaters;
• Fuel switching in heating systems (where possible).
• The estimated lead time to implement these measures is one or two days.

Medium-handed measures would also target the transport sector. These would include:

• Speed limit reductions;
• Driving restrictions (i.e. one day per week, weekend driving, etc.);
• Prohibition of motor sport events.

Authority for the implementation of these measures is established by the Energy Intervention Powers Act (2012). The administration estimates that the medium-handed measures could reduce consumption for the sector by 15-25%. The lead time for the implementation of these measures would be approximately one or two weeks.

The Energy Intervention Powers Act (2012) also grants authority for more heavy-handed measures. For fuel oil, these measures would include:

• An allocation program for large consumers, determined by the Federal Chamber of Commerce, based on consideration by the Energy Steering Advisory Committee;
• Delivery restrictions and allocation among retail traders for small consumers.

For automotive fuels, the potential measures are broken down by sector. They include:

• Private Sector: Rationing through coupons which would be made available by the Federal Ministry of Economics and Labour and distributed through motor vehicles registration offices;
• Public Sector: Distribution of coupons by local authorities on the basis of allocated contingents;
• Commercial Sector: Distribution of coupons by the Federal Chamber of Commerce.

Voluntary demand restraint measures are Canada’s stated preferred contribution in the event of an IEA Collective Action. The Government of Canada, through a robust Federal/Provincial/Territorial emergency management system, underpinned by the Federal Emergency Response Protocol, has various overlapping systems for coordinating government responses in an emergency.

The federal government would assume the lead on any demand restraint actions taken at the national level, such as public communications programs and telecommuting measures targeting federally-regulated employees. It would coordinate with provincial governments to encourage the roll out of demand restraint measures that are handled at the Provincial or Territorial level (provincially-regulated employees, road and traffic regulations, transit programs, etc.). If such efforts are found to be insufficient, the Government of Canada could implement more specific and/or compulsory demand restraint measures under a declared national emergency.

Based on data provided in the IEA’s publication Saving Oil in a Hurry, the Canadian Administration has commissioned a study to model the savings from potential demand restraint measures. These include several light-handed demand restraint mechanisms, such as eco-driving measures, car-pooling, telecommuting, and increased use of public transport systems that is estimated could each save between 0.1%-1.5%, depending on the intensity and variety of the methods used. More severe measures, only applicable under a declared national emergency, such as odd/even driving bans, are estimated to save around 20-30% in road fuel usage (approximately 220 kb/d to 330 kb/d, equivalent to 9-14% of Canada’s total oil demand).

Under the Consolidated Act 88 of 26 February 1986 on Supply Measures, the Minister responsible for energy may, in time of an internationally induced crisis, stipulate provisions about the use, distribution, price equalization and location of stocks of commodities. Demand restraint is not envisioned as an initial response to an oil supply crisis. In a severe and long lasting oil supply disruption, the Administration may consider light-handed demand restraint measures to supplement the use of compulsory stocks.

Finland’s government considers demand restraint measures to be a last resort, to be implemented only in the event of a severe and long-lasting supply disruption.

The country’s available demand restraint measures range from light-handed measures for use in a relatively minor crisis to heavy-handed compulsory measures in a severe crisis. 

Examples of light-handed measures include: media campaigns; the lowering of speed limits; encouraging the lowering of room temperatures; and encouraging reduced usage of hot water. 

Examples of heavy-handed measures include: compulsory restrictions on hot water and air conditioner use; limiting motor vehicle use; rationing transport fuels; rationing light/heavy fuel oils for heating; rationing of fuels for industrial and agriculture use; and rationing of electricity and district heating.

Light-handed measures could be implemented immediately by the administration, while compulsory measures may require up to 1-3 months preparation.

The Administration has prepared a series of Fuel Rationing Plans under the Security of Supply Act which are periodically updated to take into account changes in the local oil market.  

The German administration has a strong preference for releasing emergency stocks in case of an oil supply disruption. Demand restraint measures are considered in cases of a long-lasting and/or very severe supply disruption; any decision would take into account the negative impacts such measures could have on economic activities. The precise mix of measures is determined based on circumstances.

Germany has a range of demand restraint measures that can be deployed in case of an oil supply-related emergency. Following a declaration from the federal government that domestic energy supply either is at risk or has been disrupted, demand restraint measures can be implemented via ordinance, with possible measures including: imposing or lowering speed limits, Sunday driving bans, prohibitions on the use of vehicles (including aircraft, boats, etc.), and prohibition of motor sports events. If the measures are implemented to meet the obligations of the IEA’s IEP, however, a government declaration is not required.

There are also ordinances on the rationing of gasoline, diesel and heating oil. In the case of heating oil, it would require the approval of the Bundesrat given the role of the Länders in implementation. The lead time for this whole process is approximately two to three weeks with the exception of transport fuel rationing, which would require a considerably longer period to become operational. In defined crisis situations, the Act on Safeguarding Transport Services allows for a requisition of additional transport services from private companies to allocate oil products according to priority needs.

When demand restraint measures are activated, their effectiveness – in terms of volumetric savings – are monitored via the oil industry’s monthly statistics reports.

While stock drawdowns are the central element of Hungary’s emergency response strategy, the Minister for National Development also has the power to decree demand restraint measures to restrict consumption. Hungary distinguishes between three levels of demand restraint: light-handed, medium-handed and heavy-handed measures.

The light-handed measures can be executed within a few days and would result in a 2% to 4% reduction in consumption. They include:

• Publicity encouraging people to forego cars for short trips
• Reducing the temperature of public buildings
  

The medium-handed measures would take one to two weeks to implement and would result in a 4% to 8% reduction in consumption (including the aforementioned light-handed measures).

They include:

• Introducing driving and speed restrictions
• Prohibiting driving one day a week or at weekends
• Restricting the use of passenger cars based on registration numbers

The impact of heavy handed-measures has not been quantified, but they could include:

• Quotas for major consumers
• Retail quotas
• Introduction of rationing tickets for motor fuels in the private sector

The government’s demand restraint policy is detailed in the 2014 Handbook for the Management of Energy Emergencies, and can be activated by the Minister for Economic Development.

The possible measures include appeals to the public for voluntary measures to limit consumption, a reduction in domestic heating, and possible driving restrictions. During a crisis, monitoring activities would be intensified, including increased frequency of reporting of stock levels and product deliveries to the market. Industry participants would also be required to submit forecasts of anticipated sales on a regional basis.

In the event of a more severe crisis, regional shortages of oil products could be addressed through a compulsory redistribution of supplies, subject to approval by the Ministry of Economic Development.

The Administration has indicated that driving bans would be prioritised if it resorted to mandatory demand restraint measures. Italy has significant experience in imposing odd/even licence plate schemes, mainly to reduce air pollution in metropolitan areas. These measure can reduce by 10-15% the normal consumption of gasoline and diesel for transportation. As oil use for heating has diminished, the scope for oil savings through demand restraint measures on domestic heating is declining. 

Demand restraint measures that could be considered the case of an oil crisis include public awareness campaigns, temperature and lighting control of buildings, voluntary or mandatory restrictions on vehicle use, regional oil allocation to major oil consumers and restrictions on refinery operations.

Korea does not have estimates of potential savings for demand restraint measures, which would be helpful to target the most efficient measures to be implemented in the event of a supply disruption.

In May 2018, the government decided to elaborate a PIU (Plan d'Intervention d'Urgence) in case of a major supply crisis that would necessitate demand restraint measures. This PIU will outline the crisis management bodies, determine emergency measures and establish emergency alert procedures to implement demand restraint measures. The draft for the PIU is currently in the finalisation process.

In the event of a regional or international supply crisis, national demand restraint measures might be insufficient and regional cooperation would be more useful. Common Benelux Guidelines were established in 1983 for Ministers of the Benelux economic union to coordinate their demand restraint measures. There are four levels of co-operation in an emergency situation implying demand restraint measures in the common Guidelines: information, consultation, coordination and uniformity.

New Zealand has a series of demand restraint measures that escalate from voluntary, light-handed measures to more substantive compulsory requirements.

Voluntary demand reduction is initiated through a public information campaign encouraging consumers to conserve oil. This could include telecommuting, using public transport, car-pooling and staggering work start times to relieve highway congestion. The New Zealand authorities estimate that these measures could reduce the number of trips by approximately 10%, producing a 3.5% (5 kb/d) overall reduction in oil products consumption.

The public information campaign would also include a detailed promotion of eco-driving, encouraging drivers to use their vehicles as efficiently as possible. This includes voluntary speed reductions, avoiding rush hour traffic, checking the tuning of the car’s engine, the condition of its air filters and the inflation of its tires. Authorities estimate that these measures would reduce oil consumption by approximately 3% for cars and freight vehicles, resulting in an overall reduction of 2% (3 kb/d).

The country’s public information campaign would also target industrial and agricultural users of oil, encouraging them to conserve in different ways. It is estimated that these sectors could achieve a savings of 5% of their consumption, equating to an overall oil savings of 0.5% (0.8 kb/d).

The most complex and substantive response mechanisms available to government are allocation and quality rationing, which are available through the Petroleum Demand Restraint (PDR) Act of 1981. 

Demand restraint measures, due to their restrictive nature, would only be considered as a last resort, although the government has full authority to impose them. The following options can be used to reduce demand for oil in the country:

• prohibition of fuel sales to fuel tanks not permanently installed in motor vehicles
• a ban on the organization of motorized events
• limits on the permissible speed of motor vehicles
• limits on quantity of fuel that can be purchased at one time
• limiting the opening hours of fuel stations
• maximum daily volumes of fuels sold by fuel stations
• restrictions on motorised vessels in internal and territorial waters, as well as restrictions on air traffic
• restrictions on transport of goods and passengers
• sale of fuels limited to holders of coupons specifying volumes of fuels at specified times

Each of these restrictions may be introduced by the Council of Ministers at the request of the minister responsible for energy. Radio and television broadcasters and province governors are obligated to disseminate the content of such regulations. The observance of these restrictions is controlled by provincial authorities, trade inspectors, police or city guards. 

Demand restraint measures are an important component of the Slovak oil emergency management system. The government is required by law to develop and maintain a contingency plan to implement oil demand restraint measures in the event of a crisis. The level of demand restraint measures would depend on the severity of the crisis. In the initial stages, even before the official declaration of a state of emergency, measures would consist primarily of a mass media campaign that calls for voluntary reductions in oil consumption. Stronger measures available to the government once a state of emergency has been declared include: :

• Reducing the speed limit;
• Restriction or ban on the use of certain groups of motor vehicles or motor vehicles with certain license plates (e.g. odd/even licence plates);
• Limiting the opening hours of petrol stations;
• Restriction or ban on the sale of crude oil and oil products;
• Specification of regulatory measures for importers of crude oil and oil products determining the quantity, place, time, timetable and other terms of the release of crude oil or product stocks; and
• Temporary restriction or ban on the export of crude oil or oil products.

The restriction or ban on exports may only be implemented during a domestic state of emergency if stocks need to be released to meet the needs of the domestic market, and if the measures do not conflict with international obligations. 

The “Crisis Laws” framework provides the administration with powerful tools, including fuel rationing or limiting consumption. The Swedish Energy Agency (SEA) also maintains and updates a set of public information campaign messages for the reduction of fuel consumption in an emergency.

A decision to implement demand restraint measures would be made by the government based on a proposal from the SEA. In a severe fuel disruption when allocation to priority customers becomes necessary, the decision-making and implementation would take place at the municipal level with the SEA coordinating and providing advice.  

The Dutch demand restraint programme relies on voluntary measures first, before proceeding to mandatory ones. The National Emergency Sharing aims to reduce private and recreational use of oil products, before requesting appropriate refinery action, leaving economic activities untouched as much as possible.

The shares of passenger road transport (20%) and freight road transport (12%) in the national oil demand are comparatively low. As a consequence, an oil demand reduction in road transport of at least 20% to 30% is required to meet the national oil demand reduction target of 7% to 10% agreed within the IEA.

According to a 2010 study, demand restraint efforts could reduce oil demand in the transport sector with relatively limited impact on the overall economy. However, there is no assessment on possible oil demand restraint from petrochemical production.

Rising prices during energy crises are estimated to reduce oil demand from passenger road transport by 15% to 35% and from freight road transport by 10% to 25%, though these figures are uncertain given limited research. Given this uncertainty, the projected effect was halved to obtain a conservative estimate of 2% to 4% of national oil demand reduction as a result of price effects. A Sunday driving ban can lead to reductions of 50% to 80% of passenger travel on Sundays, leading to savings of 1% to 1.5% of national oil demand. Work-trip reduction policies can reduce work trips by 10% and lead to reductions of 0.5% to 1% of total oil demand. Car-pooling has the greatest potential, reducing work trips up to 30% and leading to 0% to 2.5% savings of national oil demand. The broad range of the latter estimate is due to the limited options available to influence motorists to share their vehicles with others.

The Dutch demand restraint programme focuses first on voluntary measures, such as reduction of speed limits, Sunday driving bans (allied with bans on pleasure boating and flights), requests for appropriate refinery action, and bans on filling containers to limit hoarding.

If these prove to be inadequate, Dutch authorities can proceed to obligatory measures, aiming to reduce private and recreational use of petroleum products, while leaving basic economic activities untouched as much as possible. 

Under the Energy Act 1976, the government has the authority to regulate or prohibit the production, supply, acquisition, or use of oil or petroleum products. The demand restraint measures available in the United Kingdom are set out in the National Emergency Plan for Fuel (NEP-F). They range from light-handed measures to the allocation and rationing of oil products. In a disruption that requires central government action, light-handed measures are preferred.

Light-handed measures include: communication strategies to disseminate the relevant information quickly and to reassure the public to limit panic buying; demand-reducing measures, such as speed limit reductions and voluntary demand reduction campaigns; and the relaxation of regulations that affect the supply or use of petroleum products (e.g. gasoline, diesel, heating oil, and LPG) – such as those relating to drivers’ hours.

In the event of industrial action that affects fuel deliveries, this may include the provision of military fuel tanker drivers to industry to maintain civilian fuel supplies as a last resort. The Department of Business Energy and Industrial Strategies works with the downstream oil industry, which includes haulage companies, to maintain a capability within the armed forces to make fuel deliveries in the event of a serious disruption to normal deliveries.

The Federation of Petroleum Suppliers launched the Cold Weather Priority Initiative in October 2017 to identify those most at risk of loss of heating oil, so these customers can be prioritised during periods of extreme cold or fuel shortages.

The use of more heavy-handed demand restraint and allocation measures by central government is unlikely but, in the event of a crisis, can be introduced as necessary.