Index of U.S. Energy Security Risk
This 2012 edition of the Institute for 21st Century Energy's (Energy Institute) Index of U.S. Energy Security Risk (Index), the third in the series, provides an updated look at U.S. energy security since the 2011 edition was issued in August 2011. The Index incorporates 37 different measures of energy security risk that include: global fuels; fuel imports; energy expenditures; price and market volatility; energy use intensity; electric power sector; transportation sector; environmental; and basic science and energy research & development.1 The Index looks back in time to 1970 and forward in time to 2035.
The Energy Institute's Index combines 37 metrics to create four Sub-Indexes that identify the major areas of risk to U.S. energy security: geopolitical, economic, reliability, and environmental. These four Sub-Indexes were then merged into an overall Index based on the following weightings:
- Geopolitical 30%
- Economic 30%
- Reliability 20%
- Environmental 20%
The weighted average of the four sub-indexes constitutes the overall Index of U.S. Energy Security Risk™.2
This 2012 edition reflects revisions to the historical data and the new forecast in the Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 2012 issued in June 2012.
The Index is designed to convey the notion of risk: a lower Index score indicates a lower risk to energy security and a higher score indicates a higher risk. When evaluating the results, it is important to recognize that the Index necessarily moves along an open-ended scale. To provide a relative sense of potential hazard, the Index score for 1980, a particularly bad year for U.S. (and global) energy security risks, was set at 100. Index scores that approach or surpass 100, therefore, suggest a very high degree of risk.
The average Index score for the 30-year period from 1970 to 1999, a period that includes times with relatively very high (100) and very low (75.2) scores, is 84.2. The 1980 baseline score, the historical high and low scores, and the 30-average scores found in table 1 for the total composite Index and the four sub-indexes can be used as historical reference points against which to assess current and future risk scores. It is also important to note that in this report, unless noted otherwise, all dollar figures are in real 2010 dollars.3
The Index is focused exclusively on the United States and how its energy security risks have trended over time and may trend into the future. The Energy Institute also has developed an International Index of Energy Security Risk that puts the risks to the U.S. in an international context and provides comparisons with other large energy producing countries. Readers interested in how U.S. risks stack up against those faced by other countries should consult the International Index, which is available on the Energy Institute website, www.energyxxi.org.
1 Each of the 37 metrics is presented and discussed in Appendix 2.
2 Appendix 1 contains more information on the methods used to develop the Index.
3 Real 2010 dollars are used in the report to give readers a better idea of prices and expenditures in vis-à-vis today’s prices. To develop the metrics, however, real 2000 dollars were used to provide comparability with previous editions of the Index. Real 2000 dollars can be converted into 2010 dollars by multiplying the 2000 dollar value by 1.2521.