from Energy, Security, and Climate and Energy Security and Climate Change Program

Two New Looks at Energy and Security

October 15, 2013

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Three years ago, convinced that U.S. thinking about energy security was stuck in the past, my colleagues and I launched a new CFR effort on energy and national security. Today, forty years after the first oil crisis, CFR is publishing two new products of that effort. These follow earlier publications on energy market transparency, the pivotal role of spare capacity, Iran-related oil market contingencies, transformations in U.S. energy, the Strategic Petroleum Reserve, and cyber security for oil and gas, among others. Expect to see more work published in the coming months.

The first piece we’re publishing today is “The Shale Gas and Tight Oil Boom: U.S. States’ Economic Gains and Vulnerabilities”. In this piece, Stephen Brown (UNLV and RFF) and Mine Yucel (Dallas Federal Reserve) present new state-by-state estimates of how the U.S. economy might react to future changes in oil prices – including ones stemming from geopolitical disruptions overseas. Their work updates previous estimates that they published nearly twenty years ago. Brown and Yucel find that most states have become less vulnerable to spiking oil prices. They also find that even oil-rich states are more diversified than they were in the past. The upshot is that they’ll be less vulnerable if oil prices plunge. But seven states retain the odd position of being vulnerable to oil price crashes even as the rest of the country would benefit from cheaper crude. Read the whole paper here.

The second paper we’re publishing today is “Oil Security and Conventional War: Lessons from a China-Taiwan Air War Scenario”. This paper, by Rosemary Kelanic (George Washington University), challenges the conventional wisdom that modern oil security is all about economics. Once upon a time, oil shortages could change the course of wars: indeed access to oil was critical as recently as World War II. But today, civilian economic demand appears to dwarf military oil needs, and oil security calculations seem to be entirely about ensuring economic health. Kelanic calls that into question by carefully modeling oil demand during a hypothetical China-Taiwan air war. How much jet fuel would the militaries need? How much could domestic production and strategic reserves contribute? How might oil shortages (and the fear of them) shape the course of a conflict, and, well before one, influence both countries’ military and foreign policies? Kelanic’s answers suggest that oil security calculations and prospective wartime energy needs are still tightly intertwined. Read the whole paper here for more.