Index warns US energy security risk dangerously high

The U.S. Chamber’s Energy Institute has made assessing the nation’s energy security risks much easier with a recently released Index of Energy Security Risk that is based on 37 unique metrics. The metrics are based on geopolitical, economic, reliability and environmental aspects that affect the country, and the numbers show that for 2010 the U.S. reached the fourth highest risk score since 1970, tallying 98 out of a possible 100, with 100 being the worst. The geopolitical and economic areas of the index account for 30 percent each of the total score, with reliability and environmental factors accounting each for 20 percent. Karen Harbert, President and CEO of the institute, said that, with the index, “We now have a tool that can answer the simple question, is our energy security getting better or worse and why.”

In addition to assessing the nation’s current energy security risks, the index will assess how current events throughout the year play a role and how proposed policies will affect energy security risk. “We have a bewildering set of energy policies and layers of complex regulations that have served only to increase our energy security risks,” Harbert explained, “and we are paying the price in slower economic growth.”

The forecasts created by the index show that by 2035, the energy security risks will rival those of 1980-‘81 after the Iranian Revolution and during the hostage crisis, a risk score that equaled 98.4 out of a possible 100. “Increasingly, geopolitical risks are imposed upon us rather than set by us,” she said, “we see this today in high and wildly fluctuating oil prices that in earlier years would have been unusual for a struggling economy.”

Compared to 2009, when the energy security risk was actually showing a decrease, 20 of the 37 metrics that measure risk were once again on the rise, according to Stephen Eule, vice president at the Energy Institute. High energy prices and market volatility were major factors that contributed to the increase, but developments in areas such as domestic shale gas acted as a “bright spot.”

The metrics used in the index include global fuels, fuel imports, energy expenditures, price and market volatility, energy use intensity and, among others, energy research and development. In the R&D sector, the most recent index shows that the necessary work to make renewable energy cost competitive with fossil fuels is being held up by regulatory delays and uncertainty. “While the nation is climbing slowly out from its economic recession, we remain mired in an energy recession,” the index points out. Harbert said that we need to maximize all of our energy options, because, as she noted in the 2010 index, “some risks we cannot control, which makes it more important to tackle those that we can.”