Oil

This chapter surveys the evolution of Japan's oil policy. The three interrelated challenges stem from the Japanese government's treatment of oil as a strategic commodity, which is not surprising given that Japan remains almost exclusively reliant on oil imports and the country's experiences during the 1970s oil crises. The chapter demonstrates that Japan continues to pursue self-developed, or equity, oil, a historically wasteful strategy and one mired with inefficiencies in Japan's oil companies, with Japan never achieving desired policy goals. It argues that Japan has been a key participant in the zero-sum competition among Asian oil importers, particularly since the emergence of China as a major oil importer in the early 1990s. Japan's international oil policy has suffered a number of policy failures despite being a component of Japanese energy security strategy since the oil crises. Equity oil has only ever provided half the oil expected by MITI/METI and Japan continues to be largely dependent on the Middle Eastern oil.