Annual Index of U.S. Energy Security Risk Shows Best Scores in 20 Years
WASHINGTON, D.C.—America’s energy security is at its strongest point in two decades, according to the latest edition of the U.S. Chamber Institute for 21st Century Energy’s Index of U.S. Energy Security Risk.
The Index employs 37 different energy security metrics in four major areas of risk: geopolitical, economic, reliability, and environmental. A lower Index score indicates a lower level of risk. The seventh annual edition of the Index covers 1970-2040 and incorporates the latest historical data and forecast models. In 2015—the most recent year available—risk dropped 3 points, to 78.0, the lowest level since 1996.
“It is not a coincidence that American energy security has shown vast improvements at the same time that America’s innovative energy industry was able to ramp up oil and gas production, ” said Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, which produces the annual report. “Our recent Energy Accountability Series quantified just how dramatic the impact of the energy renaissance has been. Without it, America would have 4.3 million fewer jobs and consumers would be paying 31 percent more for electricity and 43% for gasoline. While we’re not in a period of sustained improvements, the story would be much different without these advancements.”
The biggest improvements within the Index were in areas related to measures of oil and natural gas sector, such as imports, import expenditures, and oil prices, and to energy efficiency. Despite slumping prices, domestic crude oil output still increased by over 7%, though that increase is off the pace of previous years. Natural gas production achieved a record high, with a 5% increase in 2015.
However, despite the overall good news, there were still some warning signs. Crude oil price volatility rose significantly, driven by the desire of some large producing countries to capture greater market share by driving prices down sharply. Rapid shifts in prices in either direction—volatility—can create unstable market conditions that increase energy security risks. In addition, electricity capacity margins—the amount of unused power capacity—have declined, increasing the vulnerability of America’s electric grid in the event of a disruption.
“The greatest threats to America’s energy security are largely components that we control,” said Harbert. “A continued regulatory assault on American energy production could lead to less diversity and reliability. And perhaps the biggest threat of all is the ‘keep it in the ground’ movement, which if actually implemented, would erase the gains made in recent years and bring us back to an era of dependence on foreign sources of oil.”
Looking forward, the Index projected energy security to average 78.3 points from 2016-2040, with some softening of production increases due to prices. However, improvements are expected in energy efficiency and in transportation-related metrics.
A special feature in this year’s Index of U.S. Energy Security Risk is a look at trends in security of world oil production that take into account the reliability and diversity of crude oil supplies over time. It notes, for example, that about 55% of the world’s current oil output comes from countries Freedom House categorizes as “not free,” a substantial risk that makes America’s resurgence in oil production all the more important.
The Index and its companion, the International Energy Security Risk Index, are available on our website at www.energyxxi.org/energysecurity. The U.S. Index is once again available in an online, interactive web tool format, which makes it easy to see how various metrics change from year to year.