Low oil prices are sure to encourage countries to create such reserves. China is already engaged in building reserves. The opportunity should be exploited to beef up oil reserves.
What is a Strategic Oil Reserve ?
The Strategic Oil Reserve is an emergency fuel storage of oil . They are a nation’s counter against any short-term disruptions in energy supplies. These are typically state-funded and are meant to tackle emergency situations. Crude oil from these reserves can be released when there is a short-term supply disruption, a natural calamity or a global event such as a war that may lead to an abnormal increase in prices. According to the 2001 agreement, all member countries of the International Energy Agency must have a strategic petroleum reserve equal to 90 days of prior year’s net oil imports for their respective country.