Introduction

Japan's response to higher energy prices was relatively swift. Its performance in saving energy in both the industrial sector and the household sector was the best among the comparable industrial economies. From the beginning of the first OPEC price hike to the end of the second, Japan's energy consumption per unit of real gross national product declined by 28%. Energy consumption per unit of manufacturing output decreased by 29%. In the household sector, total energy consumption grew as total consumption expenditure rose by 30%. However, energy consumption “per unit of real consumer spending” dropped by 10%.

The industrial structure of Japan changed in the 1970s because of the high energy prices and also because of the development of high technology concentrated in microelectronics. When examining Japan's energy policy, we must consider the joint effects of these two factors. Development of microelectronics technology was one of the primary targets of Japan's industrial policy. Energy policy was not viewed as an industrial policy in Japan, although it does affect the petrochemical, oil-refining, and coal-mining industries. Energy policy does have a national focus, however, and this focus has evolved throughout the two oil price shocks.

In 1973–4 the energy price hike coincided with a general excess-demand condition in the market. In response, the government focused on dealing with day-to-day matters, such as controlling the price of petroleum products, securing a heating-oil supply, and drawing up a contingency plan in case the oil embargo was prolonged.