23 April, 2020
7 Min Read
Covid-19 and Economic shocks
Part of: GS-III- Economy (PT-MAINS-PERSONALITY TEST)
Steep fall in crude oil prices. Recently, May futures for the West Texas Intermediate (WTI) U.S. crude has plunged below zero and Brent crude futures has also witnessed a steep decline. A negative price implies that a seller would have to pay the buyer to hold the oil to be supplied.
The International Energy Agency (IEA) is a grouping of major oil-importing countries which was created in 1974 by the members of the Organization for Economic Cooperation and Development (OECD) at Paris, France, following the Arab oil embargo of 1973 which had resulted in a dramatic rise in oil prices. It was established with a broad mandate on energy security and other issues about energy policy cooperation among the member countries. Long term supply, information transparency, security of supply, international energy relations, research and development were its focal points. However, today IEA has expanded and evolved to be at the heart of global dialogue on energy, examining the spectrum of energy issues to advocate policies and ensure affordability, reliability & sustainability of energy among its member countries. It has 30 member nations and only OECD nations are given membership to the IEA. All the OECD member states except for Chile, Iceland, Israel, Mexico and Slovenia are members of IEA. India became an Associate Member of IEA in 2017 while Mexico became the 30th member of IEA in 2018. The other Associate members, apart from India, are China, Brazil, Morocco, Indonesia, Thailand and Singapore.
Objectives of IEA
The International Energy Agency was established with an objective to coordinate the response of the participating states to the world energy crisis along with developing a mechanism for oil-sharing for use during supply difficulties. IEA mainly focuses on its energy policies which include economic development, energy security and environmental protection. These policies are also known as the 3 E’S of IEA.
Structure of Indian Energy Agency (IEA)
The IEA consists of three main controlling bodies:
The Governing Board is composed of ministers of all the member-governments who are responsible for decision making. The Board is assisted by three standing groups dealing with emergency questions, long-term cooperation and the oil market.
The Management Committee deals with energy, research and development and the non-member countries.
The Secretariat is headed by the Executive Director. Apart from these, the IEA also maintains an import-monitoring system and a quick response mechanism.
India and IEA
India became an associate member of IEA in March 2017 but it was in engagement with IEA long before its association with the organization. India was a party to the Declaration of Cooperation, signed in 1998 which covered the matters relating to energy security and statistics. India had also signed three joint statements with IEA that covered various areas of mutual interest in the energy arena with major focus to gas and oil security.
Some of the benefits provided to India for being an associate member of the IEA are:
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