Food Reserves and Oil Reserves

Back in the 1950s, when the European Economic Community decided to have a Common Agricultural Policy, people had vivid memories of food shortages during the Second World War. Two things were very clear. One was that without self-sufficiency in food the six original member states might find themselves economically insecure, relying on imports, the price of which was unpredictable. The other was that they would also be politically insecure, subject to possible blackmail by countries on whom they were dependent for something so vital as having enough to eat.

More than half a century on, it is notable how these arguments have repeated themselves in the case of energy. Despite its origins with the Coal and Steel Community formed in 1951, the EEC and later the EU has found it difficult, if not impossible, to develop an effective common energy policy. It still depends upon imports in order to satisfy its energy needs, and it still makes a number of key decisions at the national level, rather than at the EU level, about satisfying its energy needs. One only has to think of the arguments over the Nord Stream pipeline between Russia and Germany.

Yet, despite the difficulties between member states over finding a common way of satisfying their energy needs, the EU is willing to insist upon maintaining reserves in the energy field. Oil, for instance, accounts for almost 35% of the EU’s energy mix.  Despite the talk about a transition to alternative sources of energy, EU countries are still heavily dependent on imports of crude oil and petroleum products. They have therefore decided to maintain emergency oil stocks to be used in the event of supply disruptions.

Under the EU’s Oil Stocks Directive (2009/119/EC) EU countries must maintain emergency stocks of crude oil and/or petroleum products equal to at least 90 days of net imports or 61 days of consumption, whichever is higher. Stocks must be readily available so that in the event of a crisis they can be allocated quickly to where they are most needed. The directive was reviewed and confirmed in 2018, when the EU declared:

Given the important role these products currently play in the economy, especially in the transport sector, holding emergency stocks that can be quickly allocated in case of supply disruptions to where they are most needed, remains important for the energy security of the Union.

If the holding of emergency energy stocks is accepted in the case of oil, why is not accepted in the case of food? It remains the case that both the food and energy fields deal with essentials, the price of which is volatile for a number of reasons, both political and economic. Yet oil reserves are made subject to a binding directive, while food reserves are discouraged or maintained only at the national level by a few member states.

One might speculate that the spectre of over-production from the 1960s and 1970s (think ‘butter mountains’ and ‘wine lakes’) still haunts the EU and makes it adopt a ‘once bitten, twice shy’ approach to food reserves now, but that may be a mistake. There are many differences in the economic issues surrounding the production of oil and natural gas on the one hand and food on the other. But what they both have in common is their vital importance to human life and the unpredictable nature of their supply. The case for reserves is strong enough for a directive in the energy field – why not a similar directive in the case of food?