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Feature
What Is Energy Security?
( Part II)
Economic Reserch Council
By
A F Alhaji
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?
A
F Alhajj is
an energy economist and associate professor at the College
of Business Administration, Ohio Northern University (a@a-alhajji.com).
This is the first
of five articles on the theme of energy security by Prof
Alhajji. The remaining four will be published in future weeks.
Editor's
note: This
article was originally written for Middle
East Economic Survey
(MEES) and
publish by MEES,
on 22-October-2007, MEES, VOL. L., No
43. 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. This
is the second of five articles for MEES on the theme of energy
security by Prof
Alhajji and re-publish by Petroleumworld.
The remaining three will be published in future weeks. Petroleumworld
reprint this article in the interest of our readers.
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