Edited by Hugh Dyer and Maria Julia Trombetta
Strategic Energy Reserves (SERs) are meant to help safeguard a country’s economic growth and provide a buffer to external price/supply turbulence. They are intended to dampen domestic price volatility following an energy supply/price shock and concomitant financial losses incurred as a result of production stoppages and/or the necessity of making short-term purchases of energy commodities (typically oil, oil products, natural gas or coal) from the spot market. Energy supply/price shocks can be extremely harmful to developed and developing economies alike, potentially disrupting all sectors and exacerbating existing weaknesses in economic structures. They can cause GDP to plummet and also trigger inflation and unemployment. However, not all people believe that creating and maintaining strategic energy reserves (SERs) is useful. Some believe there is little point in having them because they are costly to build and maintain, and if a supply/price shock is not resolved within a short period of time, the stockpiling is for naught. Moreover, many regard energy supplies as fungible commodities.
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