Ukraine and the geopolitics of energy

Ukraine and the geopolitics of energy

It’s been several years since the topic of energy and national security has been front and center in the news.

The Arab Oil Embargo in 1973 made Americans aware of the power that energy-producing nations can have over our economy. When OPEC reacted to U.S. support of Israel during the Yom Kippur War by cutting off our oil supplies, the U.S. was thrown into a nightmare scenario of gasoline rationing, a stock market crash, and the worst recession we’d experienced since the Great Depression.

Dependence on foreign energy sources can have a disastrous effect on our national economy.

But this issue goes beyond economics. In August 1990, Iraq invaded Kuwait, precipitating the Gulf War (Operation Desert Storm). Cynics say we didn’t enter that war out of an altruistic desire to protect the rights of a sovereign state, but out of our own need to protect U.S. oil interests in the Middle East.

The U.S. had reacted to the 1970s crisis by increasing domestic production and fuel economy standards for cars, and our reliance on foreign oil dropped during the 1980s. But according to the U.S. Energy Information Administration, net imports of crude oil and petroleum were back up to 1970s levels by July 1990 (at 8,353 thousand barrels per day), and we were particularly vulnerable.

Flash forward to today and the situation in Ukraine. The current state of affairs there is complicated, driven by a multitude of issues, but one of those issues is certainly energy. Ukraine’s location makes it critical for Russia’s oil exports to Europe. According to an article posted today on The Guardian, without the pipelines running through Ukraine, Russia’s 30% share of Europe’s gasoline market is threatened. And Ukraine’s options are limited, since Russia supplies 50% of its gasoline.

Do American consumers realize the role that energy plays in national security? The answer is yes, but it’s lower down our list of concerns, and we have a really short memory. In Shelton’s 2007 Energy Pulse study, fielded during a U.S. troop surge in Iraq, we asked, “What’s the number one reason to participate in an energy conservation activity or buy an energy-efficient product or service?” Twelve percent of Americans responded, “To protect our nation’s economy and reduce our dependence on other countries.” In last year’s Energy Pulse, we asked the same question, and only 4% offered this response.

So not only has this issue decreased in importance as the economy has improved and the number of U.S. troops in Iraq and Afghanistan has declined, it’s also never been a top behavioral driver for American consumers (for comparison, 39% of 2013 respondents said their number one driver for energy conservation was “To save money”).

The good news is that a study released today by the U.S. Chamber of Commerce Institute for 21st Century Energy finds that increased domestic energy production has improved the U.S. energy security situation. In an international ranking of countries based on their energy security, the U.S. ranks sixth, climbing four places since 2002. And where is Ukraine on this list? Dead last.

Our hope is that increased access to shale oil and natural gas reserves (which some predict will shift the U.S. from being a net energy importer to exporter by 2020) will have a calming effect on geopolitics – and that access to cheaper domestic energy sources will not subvert focus on energy consumption reduction and the continued development of alternative energy sources.

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann is a former contributor to Shelton Insights.

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