U.S. CHAMBER OF COMMERCE

2012 International Index of Energy Security Risk

2012 International Index of Energy Security Risk

For the entire period from 1980 to 2010, South Korea’s total energy security risk scores averaged nearly half again as high as the OECD baseline. Only the Ukraine had worse average scores over the period. Since 1990, the country’s risks scores consistently have placed it among the three most energy insecure countries in the large energy user group. The country produces no crude oil and small amounts of natural gas and coal. It is the world’s second largest importer of liquefied natural gas and third largest importer of coal. South Korea’s energy intensity measures are higher than their OECD averages, and the trends for many of these since 1980 indicate no improvement, and in some cases a worsening, relative to the OECD baseline.

Spain’s overall energy security risk has been higher than the OECD group average for the entire period from 1980 to 2010. While its risk approached the OECD average in the late 1980s, since then the gap has widened in fits and starts, and in 2010, it was 12% higher. Spain produces almost no oil or natural gas, and little coal, so it must import large quantities of these fuels to meet domestic demand, which has increased significantly since the early 1990s. Spain has a lower energy intensity than the OECD average, and this has helped moderate the impact of rising energy costs.

In 2010, Thailand’s energy security risk score was the second worst of the large energy user group. During the 1980s, Thailand’s total energy security risk improved rapidly, dropping over 300 points and coming at one point within 3% of the OECD average. Since about 1990, however, Thailand’s risk scores have grown sharply higher. Thailand relies on imports to satisfy large shares of domestic demand for oil, natural gas, and coal, which means its import exposure risks are higher than the OECD average or are moving higher. Moreover, greater prosperity is pushing metrics measuring energy use and emissions per person higher.

Since 1992, the Ukraine has had by far the worst energy security index scores of any country in the large energy user group, both nominally and compared to the OECD. Its scores over the period averaged about 181% higher than those for the OECD. A net importer of oil, natural gas, and coal, Ukraine scores particularly poorly on energy expenditures and energy use intensity. However, Ukraine’s overall risk has been trending downward. From its peak of 2,732—277% above the OECD average—in 1996, the country’s total risk score fell to 2,011 in 2009—still 130% above the OECD average but a considerable improvement, and recent trends suggest further improvements.

Since the 1980s, the United Kingdom has scored consistently in the top three most energy secure countries in the group of large energy users, and it has been the most energy secure of the European countries. Its risk scores have trended well below the OECD average. Since the mid-1990s, however, this advantage has been shrinking, from about 20% then to a 2010 value of 11%. The country is a large energy producer, and while its oil and natural gas import risks are better than the OECD average, the spread has been shrinking in recent years as net imports of these fuels have increased. The United Kingdom is also a fairly efficient economy, and its energy use trends have moved largely in line with the OECD average. New offshore oil and gas fields also are being developed in the North Sea. If these developments pan out, the United Kingdom should be able to maintain its position as one of most energy secure countries in the large energy users group. Its energy costs, however, are relatively high.

For most of the 1980 to 2010 period, U.S. energy security risks have run just slightly higher or lower (+ or – 3%) than the OECD average. In 2010, the U.S. was the seventh most energy secure country in the group of large energy users. The gains the United States has made relative to the OECD have been because of both actual improvement (the lowering of certain risks) and relative improvement (risks rising at a slower rate than the OECD average). The largest drivers of this relative improvement have been related to increased domestic energy production—notably oil from the Bakken Shale formation in North Dakota and natural gas from the Barnett and Marcellus shale formations in Texas and Pennsylvania—and lower energy costs. Most of this increased production has come from private or State land, however, as federal policy restricts access to federal lands, both onshore and offshore. Greater access to federal lands and production from America’s abundant oil shale and deep water resources, if allowed, could lower future U.S. oil import risks substantially. The United States also is a large producer and a growing exporter of coal. In those areas, such as energy use intensity, where the United States is performing relatively worse than the OECD average, the differences generally are not all that large and are for the most part lessening.