WASHINGTON, D.C.-Increased oil and gas production and continued environmental improvements reduced America's energy security risk in 2012, according to a new report issued today by the U.S. Chamber's Institute for 21st Century Energy.
The 2013 Index of U.S. Energy Security Risk, the fourth annual edition of the Institute's unique tool to measure energy security, tracks 37 individual metrics in four primary areas-geopolitical, economic, reliability, and environmental-from 1970-2040. For 2012, America's energy security risk score was 95.3, down from 102.0 last year, the highest since 1970. Highlights of the report are available here.
"While America's energy security risk remains high compared to historical levels, 2012 saw significant improvements in many areas, which underscores how rapidly the outlook on our energy future has changed," said Karen Harbert, president and CEO of the Energy Institute. "We still have a long way to go, but the improvements we've seen recently should give us hope that continued development of America's vast energy resources will lead us toward greater energy self-reliance and security."
Of the 37 metrics studied in the report, 26 showed lower risk, seven higher risk, and four had no change in risk from last year. Six metrics dropped by at least 10 points, largely as a result of increase domestic oil and gas output, particularly from unconventional sources. These include metrics related to oil and natural gas imports, energy price volatility, and carbon dioxide emissions. After a four year period in which price volatility risks increased by 139%, volatility dropped in 2012 by 55 percent, led by stable oil prices, slightly lower energy demand, improving energy efficiency, and falling natural gas and retail electricity prices.
"There's no question that America's energy security has been strengthened by the increase in domestic unconventional oil and gas production on private lands in 2012," said Stephen Eule, vice president of the Energy Institute. "This increase lowered import expenditures and has resulted in a more stable energy market and prices."
Within the four sub-indexes, the Geopolitical Index improved from 102 in 2011 to 97.4 in 2012, the Economic Index improved from 103.3 to 95.6, the Reliability Index improved from 114.4 to 102.2, and the Environmental Index improved from 87.9 to 84.7. Of particular note is that risks related to carbon dioxide emissions fell to their lowest level since 1994, reflecting gains in efficiency, increased use of natural gas, and sluggish economic growth.
Overall, the U.S. Index is projected to average 92.7 points over the forecast period, a decline of four points from last year's projection because of the impact of greater U.S. oil and gas output. The forecasting period for the Index was extended by five years in the 2013 edition, reflecting the availability of more data.
"While this year's Index largely brings good news, there are still warning signs for the future," Harbert added. "For instance, the Index's future projections show high risks for reliability due to a looming decrease in power-sector diversity and the lack of new electricity infrastructure in the pipeline. Continued unrest in the Middle East also could also bring some instability to energy markets."
The Index of Energy Security Risk includes an interactive web tool that allows users to explore each year's data broken down by category. To read the full report, and learn more about how the Index was computed, visit our website.
The mission of the U.S. Chamber of Commerce's Institute for 21st Century Energy is to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy to help keep America secure, prosperous, and clean. Through policy development, education, and advocacy, the Institute is building support for meaningful action at the local, state, national, and international levels.
The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.