What Is Energy Security? Part I/5
By A F Alhaji in Energy Politics Archives Spring 2008
In this 5 part article by Dr. Alhaji we examine the meaning of the term “Energy Security” a widely discussed yet often misunderstood concept in global energy policy. While Energy Security is often given a central role in shaping international relations and economic strategies, its definition and implications remain contested. In this latest contribution to our working history series, Dr. Alhaji explores the various dimensions of energy security, analyzing how both oil-producing and consuming nations approach the issue. The series examines the role of oil nationalism, the challenges of balancing supply and demand, and the unintended consequences of certain energy policies. Through a critical yet objective lens, this series aims to provide a clearer understanding of energy security, its complexities, and its impact on global energy markets.
Politicians and IEA officials who press the oil producing countries for “security of supply” are instigating nationalism in these one-resource states.
Many pundits warn about the impact of oil nationalism in oil producing countries on energy security in the oil-consuming nations. They ignore the fact that talk about energy independence and lower oil imports in the consuming countries is another facet of oil nationalism, which paradoxically leads to greater energy insecurity. Politicians and IEA officials who press the oil producing countries for “security of supply” are instigating nationalism in these one-resource states. They give legitimacy to an illegitimate concept – “security of demand.” The rise of both concepts in recent years hinders cooperation and increases animosity between the two groups.
US politicians who call for eliminating dependence on oil to “improve energy security” and at the same time agree to fund doubling the size of the US SPR to “improve energy security” are ignorant of inherent contradictions in their proposals. Politicians who support building up the SPR in their countries seem blind to the fact that it reduces commercial stocks, thus rendering vain their efforts to enhance energy security. The contradictions built into the concept of “energy security” make it as elusive as a needle in a haystack. Worse, politicians talk about energy security despite the fact that they do not provide a clear definition of energy security and do not know how to assess it or measure it. Even energy literature has failed to come up with a definition that most people can agree on. In a sense, we are searching the haystack, but we do not know what we are looking for.
This is the first in a series of articles on energy security that aims to invigorate the debate on energy security in the hope that experts and policy makers will have a better understanding of these issues. The costs of not understanding them are steep and cannot be ignored: energy independence posturing could well lead to energy shortages and political instability.
What Is Energy Security?
The debate should focus on answering questions such as: What is energy security? Is it just a slogan or a real issue that societies have to deal with? If energy security is a real issue, what are its main concerns? Is the aim of energy security to eliminate or reduce the effect of energy shortages or to reduce energy prices and reduce their volatility? What is the relationship between energy security, national security, economics security, and environmental security? Should governments intervene to enhance the energy security of their nations or leave this matter to free markets? Why or why not? Should governments intervene only during periods of market failures, or should they intervene to prevent market failures? What is the role of monetary and fiscal policies in improving energy security?
Does energy security apply only to consuming countries? What about producing countries? Should oil producers intervene to protect the value of their energy exports to get what they call a “fair price”? What is the fair price? How does this price contribute to the world energy security?
Why does it vary substantially from time to time? What are the factors that determine such a price?
Is energy security the responsibility of each country, of all countries, or a group of countries? What is the exact relationship between interdependence and energy security? Does cooperation among energy producing and energy consuming countries enhance energy security?
What is the theory behind such thinking? Is there any evidence to show that such cooperation works? Should that cooperation be market-based and market driven? Or should it be negotiated?
Of SPR?
Does building the SPR enhance energy security? If the answer is yes, does the location of the SPR matter? Does it matter who owns the SPR? Should the SPR contain all types of crude and products or just certain types of crude? As oil imports increase over time, should the level of the SPR increase proportionally to keep the days of import cover the same?
Does energy security apply only to tradable energy resources such as oil and natural gas or to all energy sources? How does nationalism threaten world energy security? Does privatization of national energy companies enhance energy security? How does the privatization of the national companies differ from the privatization of energy resources?
And finally, does energy self-sufficiency enhance energy security?
Now I hope that I’ve got you thinking.
Asian Countries And the Concept of “Energy Security” (Part 2/5)
Energy security “fever” has reached China, India, and Japan. Unfortunately, it seems that those “eastern” countries do not know the meaning of this imported “western” concept. The importation of this one-size-fits-all concept has led to contradictions among policies on one hand and between policies and their objectives on the other. These contradictions have in turn led to policy failures, rendered the concept of energy security hollow, and jeopardized world energy security in the process.
Energy demand in Asia, especially in China and India, has increased substantially in the last decade. Although India and China are oil producers, their domestic production has not been able to keep up with the growing demand. The result is a growing gap that has to be covered by imports of oil, natural gas, and LNG. Since oil has dominated energy imports in recent years, oil dependence dominates the “energy security” debate in those countries.
To enhance energy security, Asian countries have concentrated mainly on “filling the energy gap” by securing upstream oil contracts around the world, encouraging domestic exploration for oil and gas, exploring the possibility of transporting natural gas via pipelines from Iran, the Caspian, Russia, and Myanmar, and securing long-term LNG contracts with Qatar, Iran, and Algeria. At the same time, government officials in several Asian countries have started talking about the “energy security” of their nations. Some Indian officials’ statements go so far as to call for elimination of energy dependence.
Policy Contradictions
If the officials of those Asian countries are truly worried about “energy dependency” and “energy security”, then they have to answer the following question:
Why do they make such dependency legal and binding by signing exploration and production contracts with some oil producing countries?
Why do they sign contracts with the least secure countries in the world?
How does investment in the upstream sector of some unstable oil producing countries that are as far away as Venezuela enhance the energy security of these Asian countries?
How does the security of oil supplies differ from the security of the investments of Chinese, Indian, and Japanese oil companies in the oil producing countries, some of which are known for their political instability?
Why was the visit of the Saudi monarch to China and India termed historic by the same officials who are worried about “energy dependency”?
Ignorance, Political Posturing Or Both?
The contradictions between calls for “energy independence” of some Chinese, Indian, and Japanese government officials and the actions of their government-owned oil companies indicate that most politicians do not know what energy security is, which smacks of political posturing. Even if they are aware of its meaning, these countries lack the measures needed to assess and measure energy security. In most cases, they lack the timely data required to build such measures.
If it was not “ignorance” or “political posturing,” can officials explain why they are worried about “dependence” on oil supplies from the Middle East? Can Indian officials, in particular, explain why dependence on their historic and geographic partners in the Gulf is “dangerous”? Can they explain why, for example, the impact of 30% dependence on oil imports is different from 60%? Those in China and India who are worried about the increasing dependence on oil imports must answer the following questions:
How can they explain the economic miracles of Japan and Germany despite their 100% dependence on foreign oil?
How can they explain the impressive high rates of economic growth in their countries in recent years despite record-high oil prices?
How can they explain this impressive economic performance despite record dependence on oil imports?
And one more question: should the Saudis lead the way in eliminating “dependence” on Chinese, Indian, and Japanese products?
……
This article provided a general framework in which it identifies six dimensions of energy security. The critical problem is the lack of timely data to measure and assess energy security situation in most consuming countries. Without measurement and assessment, decision makers cannot make the correct policy recommendations to avoid an energy crisis.
While energy independence might improve some aspects of energy security, it does not shield the country from energy shocks. The petroleum market is global. Any shortage in any part of the world will increase petroleum prices worldwide. Therefore, policy makers in the consuming countries can enhance energy security by fostering interdependence rather than agonizing about dependence.
Read full article here..
About the Author:
At the time of writing (2008) Dr Alhajji was president of the Ohio-based Energy Security Analysts, LLC. The article draws on a chapter entitled “India’s Energy Security: Concepts and Measures” in “West Asia in Turmoil,” Published by The Institute for Defense Studies Analysis, New Delhi, India, 2007. The article has been reprinted with the permission of MEES.