The paradox of today's quest for energy independence is that pursuing it actually increases energy insecurity. However much politicians who call for energy independence might prefer it otherwise, the market has chosen oil as a staple energy source.
Governments should therefore ignore neither the interests of oil exporters, on whom consumers in their countries depend, nor exporters' reaction to the rhetoric of energy independence or to steps taken to achieve it. Isolationist politicians may not care about other countries' economies, but they should think twice lest they harm their own economy.
The biggest threats to the world's energy security are not terrorist attacks or embargoes by oil-producing countries -- short-term events that can be dealt with quickly and effectively through various measures, including reliance on strategic petroleum reserves, increases in production, and diversion of oil shipments. Instead, the main threat to the long-term sustainability of energy supplies is the mismatch between investment in additional capacity and energy infrastructure, on one hand, and growth in demand for energy on the other.
Major oil exporters could respond in a variety of ways to political posturing on energy, most of which would exacerbate rather than ameliorate the global energy situation. One of the most plausible scenarios in response to calls by governments and politicians around the world to reduce or even eliminate dependence on oil is a relative decline in investment in additional production capacity in the oil-producing countries.
An energy crisis in this case is almost certain if those who press for energy independence fail to provide a workable alternative in a timely manner. Of course, these efforts will almost surely fail to replace oil within a reasonable time, as they are not market-driven and require heavy subsidies.
Indeed, confronted by political leaders' hostile rhetoric, oil producers have a strong incentive to increase production in order to lower oil prices to levels that undermine the economic feasibility of alternative energy sources -- a logical interventionist policy to counter the anti-oil interventionist policies of consuming countries. After all, a collapse in oil prices would be a death sentence for several new energy technologies, and, not incidentally, would increase demand for oil.
Even if the oil producing countries do not intentionally bring about an oil price collapse, they might accelerate production as much as they could in the short term, while oil still had some value. But lower oil prices, coupled with expectations of a decline in demand, would in turn put pressure on oil-producing countries to reduce planned investments in production capacity or even to mothball major projects, as they have done in the past, leading to a decline in oil supplies. Thus, if alternative energy technologies did not come on-line by the time oil production started to fall, global shortages would become inevitable, while closing the investment deficit would take years, even in the face of rising oil prices.
In spite of these possibilities, let's assume that plans for energy independence succeed, and that several European countries, the US, Japan, China, and India become self-sufficient. Major oil exporters could then seek to use their now less-valuable oil at home as cheap fuel for an expanded heavy industrial sector. Instead of exporting oil directly, they could export their energy embedded in metals, chemicals, and manufactured products at prices that undercut anything producers in the oil-consuming countries, especially Europe and the US, could match, given their dependence on higher-cost alternative energy sources.
Energy independence thus could destroy entire industries, especially petrochemicals, aluminum, and steel. In fact, cheap energy in oil-producing countries might make their new industries competitive with those in China, India, and Southeast Asia. The net result would be a loss of jobs and weakened economies. Countries might end up energy-independent, only to become steel-dependent or petrochemical-dependent.
So what would come next? Would politicians, with their perpetual fascination with "independence," attempt to eliminate dependence one commodity at a time? Put another way, would the cause of "energy independence" seek to reverse globalization?
Oil is a finite resource. Only long-term, market-oriented, economically viable, and sustainable energy options can ensure economic growth in both producing and consuming countries.
Isolationist policies, by contrast, always lead to shortages and discontent.
No matter how energy independence is pursued, it will never amount to anything other than an unattainable -- and potentially dangerous -- fantasy.
A.F. Alhajji is an energy economist and professor at Ohio Northern University. Gavin Longmuir is a petroleum engineer affiliated with the International Petroleum Consultants Association. Copyright: Project Syndicate
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
In the intricate ballet of geopolitics, names signify more than mere identification: They embody history, culture and sovereignty. The recent decision by China to refer to Arunachal Pradesh as “Tsang Nan” or South Tibet, and to rename Tibet as “Xizang,” is a strategic move that extends beyond cartography into the realm of diplomatic signaling. This op-ed explores the implications of these actions and India’s potential response. Names are potent symbols in international relations, encapsulating the essence of a nation’s stance on territorial disputes. China’s choice to rename regions within Indian territory is not merely a linguistic exercise, but a symbolic assertion
More than seven months into the armed conflict in Gaza, the International Court of Justice ordered Israel to take “immediate and effective measures” to protect Palestinians in Gaza from the risk of genocide following a case brought by South Africa regarding Israel’s breaches of the 1948 Genocide Convention. The international community, including Amnesty International, called for an immediate ceasefire by all parties to prevent further loss of civilian lives and to ensure access to life-saving aid. Several protests have been organized around the world, including at the University of California Los Angeles (UCLA) and many other universities in the US.
Every day since Oct. 7 last year, the world has watched an unprecedented wave of violence rain down on Israel and the occupied Palestinian Territories — more than 200 days of constant suffering and death in Gaza with just a seven-day pause. Many of us in the American expatriate community in Taiwan have been watching this tragedy unfold in horror. We know we are implicated with every US-made “dumb” bomb dropped on a civilian target and by the diplomatic cover our government gives to the Israeli government, which has only gotten more extreme with such impunity. Meantime, multicultural coalitions of US