Energy Markets and Security Risks

Risk Group Founder, Jayshree Pandya PhD discusses,” Global Energy Markets and Security Risks” with John Saucer on “Risk Roundup”. John is the Vice President Research and Analysis at Mobius Risk Group.     Introduction When we look at the advances in energy technology — that is in oil and gas, renewables, nuclear and other emerging sectors, there is a clear and visible evidence that the advances in technology has changed the geopolitics of energy industry dramatically and rapidly. It is due to the advances in energy technology that nations have now made a convincing move from an era of energy resource scarcity to an era of energy resource abundance. As a result, the geographical concentration of energy resources is now replaced with the universality of its access. However, the most important development in the global energy markets is perhaps the weakening of oil and gas monopoly.  For the better or for worse, oil and gas do not hold the monopoly power any more. This is mainly because of the stiff competition between shale, oil, renewables, nuclear and other sectors of energy that is intensifying and becoming very rewarding to consumers. Having said that, the rapidly changing geopolitics of energy security is still a bitter reminder that the supposedly golden age of energy security, where each nation will have the ability to secure affordable, reliable, and sustainable energy supplies, to maintain their respective nation’s power requirement is still more of an illusion! Even today, in a digital global age, “energy security” is a complex challenge. So the question that comes to mind is “Are each nation’s energy security challenges the same”? Perhaps not, as the global energy security challenges are very unique and very different for each and every nation. So when we evaluate “energy security” in a digital global age, the biggest obstacle to energy security is not a lack of energy resources; there are plenty of energy (both fossil and non-fossil) resources all across nations. It is the policy choices that nations make, and how they manage their security risks that have always impacted and will always impact the energy security of each nation, not only today but also in the coming tomorrow. Secure Energy System A “secure energy system” is one that is able to meet the energy needs of nations: its governments, industries, organizations, academia and individuals (NGIOA-I) for the requirement of heating, lighting, cooling, powering appliances, powering transportation; in a reliable and affordable way not only today but also in the coming tomorrow. The goal of energy security is to ensure that NGIOA-I have access to the energy services they need—and it is affordable, accessible, safe and secure. Global Energy Security Threats The common “energy security risks” include: * The incapacity of electricity infrastructure to meet growing load demand across many nations * Threats of an attack from cyberspace or geospace on centralized power generation infrastructure, transmission and distribution grids or gas pipelines * Politically motivated global Oil and Gas supply restrictions * Natural disasters * Technology Failure * The closure of major energy choke points Each nation prioritizes and addresses their energy security requirement (along with their accessibility, affordability, and sustainability) and preferences in different ways. While nations have forever tried to manage the complex challenges of energy security in silo, the question is whether they would ever see real energy security with the silo approach? Global Energy Pressure Points Amidst the belief that the greatest threats of modern energy security are complacency, uncertainty, and ideology, there is also a growing concern that,