International Indexes for Energy Security Risk

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International Indexes for Energy Security Risk
Daniel E. Klein Christopher D.
Russell Twenty-First Strategies, LLC Stephen D.
Eule Institute for 21st Century Energy, U.S.
Chamber of Commerce USAEE/IAEE 30th North
American Conference Washington DC October 10, 2011
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Going beyond the U.S. ESRI

• Energy Security is both local and global
• Several U.S. ESRI metrics are intl, with global
  values
• Intl events affect several other metrics
• Over time, a shrinking U.S. share in world energy
  markets
• Smaller share of world production, esp. oil
• Smaller share of world consumption, driven by
  faster growth elsewhere and energy efficiency
  here
• Increasingly, global market conditions are less
  influenced by U.S. activity
• Communicating energy security risks
  internationally helps U.S. as well
• Energy efficiency anywhere create benefits
  everywhere
• Ditto with shale gas renewables

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Objectives of International ESRI efforts

• Build on the extensive efforts undertaken for the
  U.S. Index of Energy Security Risk
• Concepts and Methodologies
• Data and analyses
• Extend ESRI logic to other nations
• Particularly OECD nations
• As feasible, BRIC nations and others
• Understand trends in absolute and relative terms
• Create additional products and publications for
  U.S. international fora

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Need to work within the realm of the possible

• Ideally, the U.S. ESRI methodologies could be
  extended to other countries
• Richly detailed U.S. data, complete over long
  time spans
• But intl data are a mixed bag
• U.S. vs. OECD nations vs. rest of world
• Gaps in the historical data, esp. in earlier
  years
• Price expenditure data particularly weak
• Forecasts far less detailed than U.S. in EIAs
  AEO
• Compromises are sometimes needed between whats
  theoretically ideal and whats realistically
  achievable
• Must work within available data transparent,
  credible, etc.
• Historical back to 1980, vs. 1970 for U.S. ESRI
• 20-30 metrics developed or under development.
  Most have data for all countries some are
  OECD-only
• No forecast component, at least for now

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Various products under development

• Intl Energy Security Risk Index (mainly OECD
  countries)
• A fuller set of security and risk metrics
  considerations
• Many metrics exist for all countries, but others
  (esp. price cost) are more limited, generally
  to OECD countries
• Hence, this index has the most depth, but lesser
  geographic coverage.
• Fuel Import Exposure (all countries)
• Net imports as of fuel consumption
• Do this separately for oil, natural gas, coal,
  also total net fuel imports as of total
  energy consumed
• Freedom and diversity trends are also
  incorporated
• For each country, absolute relative to OECD
  trend
• Energy Efficiency Trends (all countries)
• Energy, transportation, and CO2 intensities
• For each country, absolute relative to OECD
  trend

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Charting relative to OECD trends (1980100) shows
countries absolute relative trends
1. Petroleum Fuels, Net Imports as Percent of Consumption
2. Petroleum Production, Freedom Diversity Trends
3. PetroleumNet Import Exposure, Freedom Diversity Adjusted
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Interesting data and conceptual issues emerge

• Treating fungibility in fuel markets
• Differ by fuel?
• Differ over time?
• Substitution across fuels?
• Measuring security in global commodity markets
• Importance of supply diversity
• Importance of economic/political freedom
• Global factors over time, or country-specific?
• Defining a reference basket of countries
• OECD data are better than worldwide data
• But since 1980, countries have split up and
  merged
• Different years of entry into OECD
• Need to define OECD-ish boundaries that are
  geographically stable over time

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Next steps

• Completing data collection and assembly
• Complete metrics develop weightings
• Intl ESRI by year-end
• Other products before and/or after
• A first word. Not a last word.
• As with U.S. ESRI, a two-way communication
• Reviewers, advisors, readers have an important
  role
• Value in engaging in a dialogue
• Feedback lets us revise and improve the Index
• Expectations of annual updates and extensions

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Thank You!
www.energyxxi.org/