Academic journal article The Journal of Social, Political, and Economic Studies

Energy Security: What Does It Mean? and How Can We Achieve It?

Academic journal article The Journal of Social, Political, and Economic Studies

Energy Security: What Does It Mean? and How Can We Achieve It?

Article excerpt

This article examines the diversification of energy mix as a strategy to enhance energy security. It surveys the world situation regarding natural gas, coal, nuclear power, and bio-energy and finds that although they make a significant contribution to the global energy mix, oil is likely to remain the leading source of energy.

Key Words: Energy security; Natural gas; Coal; Nuclear power; Bio-energy; Oil.

Most energy experts strongly disagree with calls for national energy independence. The oil and Gas Journal confirms that participants in a commercially interdependent world "are dependent on globally traded energy by definition."2

Energy is essential to the economic activity that sustains and improves the quality of life. The challenge is that the largest energy consuming economies (the European Union, the United States, China, India and Japan) lack adequate indigenous energy supplies to support their large and growing economies and high standard of living. Energy deposits, particularly oil and natural gas, are concentrated mainly in the Middle East and, to a lesser degree, in other regions such as Africa, Latin America, Russia, and the Caspian Sea. Accordingly, almost every country in the world imports or exports a significant part of its energy consumption or production.3 Energy products are the largest commodities of international trade in terms of both volume and value.4 This huge volume of trade means that energy prices have a large impact on the balance of payments of both consuming and producing regions. It is little wonder that energy security is a major concern to all participants in the international economic system.

Since the early 2000s this concern has further intensified A major drive is the skyrocketing demand for oil and natural gas particularly from China and India. This rising demand has further deepened the international competition over fossil fuel deposits and underscored the need to comprehensively and adequately address the quest for energy security.

This study seeks to provide a broad definition of energy security from both the consumers' and producers' perspectives. This broad definition includes supply security, demand security, the need to secure adequate investments, and the necessity to address environmental concerns. Greater stability and predictability of energy markets are to be seen as shared goals by producers and consumers. This will further deepen interdependence between buyers and sellers and enhance the prospects for energy security. In what follows, we will examine the growing international effort to diversify energy mix (i.e., oil, natural gas, coal, nuclear power, and biomass) and will find that although these alternative energy sources provide promising potential, oil will continue to be the dominant fuel.

Energy Security - What it Means:

Energy security refers to the availability of sufficient supplies at affordable prices.5 The literature traditionally distinguishes between two different kinds of risks to energy security-short and long term. The former are generally about supply shortages due to accidents, extreme weather conditions, terrorist attacks, or technical failures. The latter risks are associated with fundamental imbalances between supply and demand, inadequate infrastructure, and insufficient investments.6

Analysts at the Cambridge Energy Research Associates (CERA) suggest several "fundamentals of energy security". The list includes diversification, security margin, high-quality and timely information, collaboration among consumers and between consumers and producers, renewed emphasis on efficiency, investment flows, and technological advance.7

In their third summit (held in Riyadh, Saudi Arabia November 2007), the heads of the Organization of Petroleum Exporting Countries (OPEC) member states underscored several themes related to a broad definition of energy security. They recognized that energy markets are integrated and interdependent; underscored the relationship between global security of petroleum supply and the security and predictability of demand; and emphasized that access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services is crucial. …

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