Peak Oil and Energy Security

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ENERGY SECURITY
Energy security means having access to the requisite volumes of energy at affordable prices in association with national security and the availability of natural resources for energy consumption. From the perspective of a government concerned and the management of strategic interests, energy security implies energy policies and standby measures that can be implemented in the event of a supply disruption—and at a cost that its citizens consider reasonable. Such measures include energy supply diversification and a certain volume of energy stock. Definitions of Energy Security:

The International Energy Agency (IEA) definitions of energy security have focused on the “adequate supply of energy at a reasonable cost”, and have referred to energy security to be just “another way of avoiding market distortions” (IEA, 1995). The underlying belief of these definitions is that “smoothly functioning international energy markets” will deliver “a secure – adequate, affordable and reliable – supply of energy” (IEA, 2002). IEA has claimed that energy security always consists of both a physical unavailability component and a price component, although their relative importance depends on the market structure (IEA, 2007). The European Commission’s Green Paper (EC 2000) states that energy security also entails respecting environmental concerns and working towards sustainable development. They clarify that the security of supply does not seek to maximize energy self-sufficiency or to minimize dependence, but aims to reduce the risks linked to such dependence. Energy plays an important role in the national security of any given country as a fuel to power the economic engine. Access to cheap energy has become essential to the functioning of modern economies. The modern world relies on a vast energy supply to fuel everything from transportation to communication, to security and health delivery systems. Some sectors rely on energy more heavily than others; for example, the Department of Defense relies on petroleum for approximately 77% of its energy needs. The growing uncertainties about stability and security that exist in the global energy market have fuelled the need for nations to have a comprehensive energy security strategy. Energy security is also essential for the economic growth and development of countries as energy in-security can hamper the productive activities in the economy as well as undermine consumer welfare. Rapid urbanization and rising middle-class incomes around the world have led to explosive growth in electricity demand. Thus, to the growing urban communities, energy security simply means keeping the lights on. Chester (2010) lists five fundamental aspects that characterize ‘energy security’. Firstly, energy security is about the management of risk – the risk of uninterrupted, unavailable energy supplies; the risk of insufficient capacity to meet demand; the risk of unaffordable energy prices; the risk of reliance on unsustainable sources of energy. These risks may be caused due to energy market instabilities, technical failures or physical security threats. Secondly, the definition of energy security may be framed to reflect a country’s energy mix, the abundance of local resources and import dependence. Thirdly, the term energy security reflects a concept of strategic intent, implying that energy security is not a policy in itself, but that specific policies have to be adopted by governments to achieve the objectives of energy security. Fourthly, energy security has temporal dimensions – the risks and threats to physical supply differ across short, medium and long-term horizons. Short-term risks include terrorism attacks and technical failures. Long-term risks, on the other hand, concern the adequacy of supply to meet demand and adequacy of infrastructure to deliver supply to markets. Fifthly, the term energy security has to be applied keeping in mind the significant differences between the oil, gas,...
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