The International Energy Emergency System

This Note provides a brief discussion of some of the issues surrounding the role of prices in an international energy emergency and the way in which the International Energy Agency (IEA) approaches them; and it offers summaries of some of the literature dealing with the IEA, and the ways in which it plans to influence oil markets and prices in the event of an energy emergency. The author concludes that, as an attempt to reduce the economic costs of an oil supply disruption or to distribute them fairly, the IEA's Emergency Sharing System (ESS) is a failure by most standards. However, precisely because of its flaws, the ESS may provide incentives for international cooperation: being publicly precommitted to triggering an international agreement that is most probably not in the interest of most parties to that agreement forces the IEA members to seek ways to avoid that trigger and increases their willingness to compromise.