UK and US among those deemed vulnerable to short-term energy shortages, say analysts
By BusinessGreen staff
Six of the G7 countries, including the UK and the US, are at a high risk of short-term disruptions to energy supply as a result of global political instability and shrinking conventional energy sources, new research has found.
France, Germany, Japan and China are also among 122 of the 196 countries rated by risk analysts Maplecroft as highly vulnerable to shocks in energy supplies and price fluctuations over the coming days or months.
The report takes account of immediate risks affecting the availability, affordability and continuity of energy supplies by evaluating energy imports, diversity of supplies, import security and energy costs.
Worldwide, western African countries Sierra Leone, Gambia and Guinea Bissau top the list of ‘extreme risk’ nations, followed by the 122 ‘high risk’ nations.
Canada was found to have the world’s most stable short-term energy supplies as a net exporter of electricity with abundant natural resources and a diverse energy mix able to offset price rises in any given sector.
The other low risk countries – Australia, Malaysia, Indonesia, Russia, Saudi Arabia and Norway – are generally insulated against the ongoing unrest in the Middle-East and North Africa (MENA), unlike much of the Western world.
For example, the US imported just under 13 million barrels of oil a day in 2008, 15 per cent of world production that year, of which 23 per cent came from the MENA region.
Japan is less dependent, but damage to the Fukushima nuclear plant and other energy generation capacity caused by March’s earthquake and tsunami severely affected its short-term energy security.
The disaster prompted Prime Minister Naoto Kan to announce plans to bring down by a third the cost of solar power generation by 2020 and to install solar panels in 10 million homes.
Alyson Warhurst, chief executive at risk consultancy Maplecroft, said that other countries could reduce their risk over the longer term by similarly increasing investment in alternative forms of energy production.
“Rising fuel prices in response to the political turmoil in the MENA region in early 2011 have shown that energy security is of paramount importance,” she said.
“In order to support economic growth and energy demands, [countries] will need to diversify energy supplies by increasing import partners and expanding domestic production and renewable energy sources.”
The Department of Energy and Climate Change is known to be working on contingency plans for addressing peaking oil supplies, and a spokesman for the department insisted that current policies could protect the country from the negative effects of energy price volatility.
“The government has been working with its international partners to improve the effectiveness of oil markets and encourage the necessary investment in increasing oil supplies and reducing oil demand,” he said.
“We are also currently engaged in fundamental reform of our own electricity market to ensure that the UK can meet its climate goals and have a secure, affordable supply of electricity in the long term.”
Over the long term, the US and China may be able to tap into unconventional sources of energy through exploitation of shale gas or, even more controversially, oil sands or deep water offshore drilling, Maplecroft said, although such exploitation would come with a high environmental cost.
The report also warned that current large oil producers such as those in the Middle East could also benefit from diversifying their energy mix or risk the local high availability of fossil fuels inflating domestic demand until reserves give out.
(Source: www.businessgreen.com )