A measure of a Nation’s Physical Energy Supply Risk
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Date
2013-10-11
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Abstract
Along with the oil price, concerns about the security of energy supply have
soared once again in recent years. Yet, some 40 years after the OPEC oil embargo in
1973, there is no widely accepted statistical measure that captures the notion of energy
security. Most likely, this deficit is the result of the great variety of resource economic
aspects that are of potential relevance. This paper develops a statistical risk indicator
that aims at characterizing the physical energy supply vulnerability of nations that are
heavily dependent on energy imports. Our risk indicator condenses the empirical information
on the imports of the whole range of fossil fuels, originating from a multitude
of export countries, as well as data on their indigenous contribution to domestic energy
supply, into a single figure. Applying the proposed concept to empirical energy data
on Germany and the U.S. (1980-2007), we find that there is a large gap in the supply
risks between both countries, with Germany suffering much more from a tight energy
supply situation today than the U.S.
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Keywords
energy supply risk, Herfindahl index, Shannon-Wiener index