Jonathan Stern [in this morning's Financial Times], director of gas research at the Oxford Institute for Energy Studies (...) suggests at least four different definitions of the problem:
- Inadequate investment in energy supply and infrastructure to meet future demand;
- Developed countries becoming increasingly dependent on imported energy from unstable countries or regions (such as Middle East oil or Russian gas);
- China and India needing such a huge volume of energy for future industrialisation that it puts an intolerable strain on resources;
- Rising oil and gas prices threatening to deprive the poorest countries of affordable energy.
To those might well be added the fear of terrorist attacks on energy installations, or natural disasters such as Hurricane Katrina, in a market with very little margin of spare capacity.
The debate over global warming also adds an extra dimension, with fears that those countries seeking to reduce their greenhouse gas emissions will make themselves uncompetitive, or be forced to turn back to nuclear energy, in spite of its uncertain financing and costs of waste disposal.
The above is a fair summary of the problem, in that it explicitly mentions global warming, and that it also (in an another, unquoted, paragraph) mentions the legitimate security issues of the suppliers, in particular their need for security of demand i.e. the ability to have some degree of certainty on the volumes they will sell, something which is essential to justify the massive investments in new production or transport infrastructure. The article also makes a clear distinction between the oil and gas industries, which, as I have repeatedly written over here, as essentially separate industries.
However, that article makes one major unsaid assumption: it takes demand growth as a given, or worse, as an necessity, accepting the hypothesis of an unbreakable link between progress, GDP growth and growth in energy consumption.
The way we count resource extraction as value creation rather than depletion of natural capital makes it look cheaper or more effective to work on boosting production than on reducing consumption, but is it?
Is it really easier to compromise with the Saudis, spark a new cold war with Putin, spar with the Chinese and the Indians while enriching countless corrupt regimes (including avowed enemies) than to make a small effort at home to avoid these imports by not needing them - simply by using less energy, as we know is possible?
Energy security is actually an energy demand problem and is entirely within our own control. If we waste less; if we consume in smarter ways; if we accept that energy is a precious resource that we can no longer take for granted, then we will have a chance to reach energy security. Otherwise we'll just be pushing the problem a few years further each time we open up a new country to investment or find a new way to extract a bit more oil or gas or coal. Maybe a few years more is good enough for us. But will it be good enough for our children?
The solution is in our own hands.