Risks of disruption

The so-called 'oil crises' of 1973 and the 1980s shocked many countries into developing national and international energy policies
These aimed to reduce the risks of disruption to supplies by geopolitical instability and unforeseen rises in energy prices
After those policies were put in place, most parts of the developed world enjoyed a period of more or less uninterrupted, and generally cheap, energy supplies.
More recently there has been a growing nervousness about energy security
What has happened to make importer countries such as the UK concerned about the risks associated with energy supply:
1. There has been unprecedented growth in energy demand across the globe
2. For a long time governments disregarded the impact that the economic growth in countries such as China and India would have on demand and prices
3. There is a huge demand for oil, leading to rising prices
4. There is a growing understanding that energy security is about relations not only with oil and gas producers but also with other competing consumers
5. There is a rising concern about the security of energy supply infrastructure
6. Higher volumes of fuel than ever are being transported over longer distances
  1. This is under threat from terrorism, lack of capacity, wear and tear to the infrastructure, piracy and political rivalries
7. In order to maintain and pay for the safe transport of energy across international borders, huge amount of private investment are necessary
8. Energy markets do not always behave as expected
  1. For example, the Iraq-Iran war of 1980-88 had a relatively limited impact on oil supplies and prices, yet more recently oil prices have jumped at the mention of strikes in Nigeria, elections in Venezuela or cyclones in the Caribbean
9. Speculation in the futures market for oil and gas has driven prices higher and increased the risk factor

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Risks of disruption

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	Created by Jodie Goodacre over 10 years ago