WASHINGTON â Americaâs energy security is at its strongest point in two decades, according to the latest edition of the U.S. Chamber Institute for 21st Century Energyâs 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 â the most recent year available â risk dropped three points to 78, the lowest level since 1996.
âIt is not a coincidence that American energy security has shown vast improvements at the same time that Americaâs innovative energy industry was able to ramp up oil and gas production, â said Karen Harbert, president and CEO of the Institute for 21st Century Energy. âOur 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-percent [more] for gasoline. While weâre not in a period of sustained improvements, the story would be much different without these advancements.â
The biggest improvements within the index were in areas related to measures of the oil and natural gas sector, such as imports, import expenditures, oil prices and energy efficiency. Despite slumping prices, domestic crude oil output still increased by over 7 percent. Natural gas production achieved a record high, with a 5-percent 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 can create unstable market conditions that increase energy security risks. In addition, electricity capacity margins have declined, increasing the vulnerability of Americaâs electric grid in the event of a disruption.
âThe greatest threats to Americaâs energy security are largely components that we control,â said Harbert. âA continued regulatory assault on American energy production could lead to less diversity and reliability. And perhaps the biggest threat of all is the âkeep it in the groundâ 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.â
Looking forward, the i ndex 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 transportation-related metrics.
A special feature in this yearâs index 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, about 55 percent of the worldâs current oil output comes from countries Freedom House categorizes as ânot free,â a substantial risk that makes Americaâs resurgence in oil production all the more important.
To access the index, visit www.Energyxxi.org/energysecurity
