Energy Independence – A Good Deal?
In a connected world, it is natural for lesser oil generating countries to depend on greater oil producing nations to meet their energy requirements – this is the basis of oil imports and exports. However, supply disruptions due to geopolitical events like the 1973 and 1979 energy crises have led to countries exploring means to reduce dependency on other nations for meeting their oil requirements. Since oil is an essential commodity, a prolonged disruption of oil exports is likely to lead to economic recession with greater global consequences. This has led countries like UK to explore options for greater energy independence. But is total energy independence a sensible goal or should there be some level of dependency involved? We will explore this question further in this blog.
USA Energy Independence
Oil imports are most problematic in domestic politics and energy security when they come from countries that are openly hostile to US foreign policy and interests (Iran, Venezuela), are former or potential future rivals (Russia) or have questionable human rights practices (Saudi Arabia). In this regard, the United States has looked to tap known or potential domestic oil reserves using mining plant and equipment to increase production. Some of these sources are the Gulf of Mexico, the Arctic Refuge, continental shelf etc. Significant strides have been made as, in 2019, the United States became a net exporter of all oil products, including both refined petroleum products and crude oil. In 2021, the US was the world’s largest producer of crude oil, thus tightening its grip on the oil market. The US has also cut down on its crude oil imports with only 19% of its imported oil coming from the Middle East and the rest coming from Canada, Mexico and other Latin American countries. However, the US is yet to become a leader in producing green energy with Canada exporting $3 billion worth of electricity to the US recently.
Australia Energy Independence
Australia is a net energy exporter and energy in Australia was sourced largely from coal and natural gas; however, in recent times renewable energy sources have accounted for 28% of the total energy produced in the country. Oil production in Australia peaked in 2000; however net imports have gone up significantly due to decline of oil-producing basins and increase in oil consumption by a growing population. Apart from oil, natural gas, coal and oil shale reserves are other major sources of energy production in the country. Since Australia has multiple major sources of energy, it can be considered majorly energy independent especially as it had made strides in clean energy production.
Energy Dependence – the Other Viewpoint
Some of the arguments stated in favour of energy dependence are listed as follows: –
- Energy independence will not decrease involvement in VUCA areas – Protection of worldwide energy security upon which the global economy is dependent, will remain a priority for the United States and other developed economies. Although vast oil supplies are located in unstable regions like Iraq, Nigeria etc. which are subject to difficult geopolitics, these geopolitics will continue to be fueled by other large consumers of oil, such as China, whether or not the Western world achieves energy independence.
- Renewable energy sources can be extremely inefficient – Alternate energy sources can be expensive, intermittent and can be a source of environmental pollution. Natural gas, nuclear power and biofuels are unreliable sources of energy and depleting the same sources of oil in the quest to achieve energy independence is likely to lead to faster depletion of natural resources. Hence this approach can be considered to be environmentally inefficient.
Concluding Remarks
The underlying reasons behind Western countries’ desire to achieve energy independence can be understood, especially in light of ongoing instability in the Middle East, Africa and Russia – all major oil generating regions. However, the sustainability and future of energy independence needs to be analyzed further as it can impact the environment and lead to further depletion of fuel sources – the result of focusing only on few sources to achieve energy independence. This is a path which needs to be tread carefully, where domestic interests are balanced against larger energy goals!