How Secure is America’s Energy Future? Chamber of Commerce Puts a Number on It

First-of-its kind index shows 1980 and 2008 highest-risk years, future looks just as perilous

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U.S. politicians who toss around the term "energy security" now have a way to quantify the broad and nebulous concept, according to the Chamber of Commerce. 

The group’s Institute for 21st Century Energy released on Tuesday a first-of-its-kind method to assess the country’s past and current energy security predicament. The Index of U.S. Energy Security Risk, as it’s called, incorporates information and data from four areas — geopolitics, economics, energy reliability and the environment.

The institute says that the nation’s energy risk is now at 83.7 out of 100, a relatively high score, though the U.S. has seen — and will see — far worse.

The year 1980 was assigned a risk index of 100, driven by falling world oil production, the Iran-Iraq war and enormously high energy prices. The 2008 spike in oil prices brought the country close to that level at 99.8. Projections for the next two decades are between today’s 83.7 and 100. 

"This seeks to be a very accurate, concrete way to display where we are today, where we’ve been over time and where we’re going," said Karen Harbert, president and CEO of the Institute.

Metrics and Weighting

Within the four policy areas, the creators of the index include 37 different metrics weighted in various ways to arrive at the final formula and value.

All of the metrics include factors like the amount the nation spends on oil and gas imports, average fuel efficiency of cars and electricity transmission line mileage. Zeroing in on the methodology, though, was no easy task, the authors said.

Stephen Eule, the vice president for climate and technology at the institute and one of the index’s creators, explained that there was much debate over how much weight to assign to each metric. The four major categories were weighted as well, with geopolitics and economics accounting for 30 percent each of the total, while reliability and environmental factors account for 20 percent each.

The added weight for geopolitics and economics are granted because they "tend to dominate much of the public debate on energy security," a report accompanying the index said.

Affecting Policy Decisions

The hope for the index, the authors say, is that politicians will use it as a "lessons learned" tool to inform the nation’s present and future energy policy decisions and help ensure a continued supply of "affordable energy."

"I hope that this can become the equivalent of a cattle prod for politicians to understand that they can’t make decisions in isolation," said William O’Keefe, the CEO of the conservative Marshall Institute, a non-profit research group.

While there is evidence of relative energy security in past decades, the authors note that at no year since the 1970 start date has the index dropped below 72.6, where it was in 1994 and 1995.

Since the Arab oil embargo of 1973, "the risks of supply disruptions, price spikes, blackouts, shortages, and environmental concerns remain, solidifying energy as pressing national economic and security priority," they wrote.

Projections out to 2030 look even bleaker. The estimated figures for those years fall between the present value and 100. In general, an increasing share of renewable energy in the marketplace is shown to decrease the risk index. Also, recessions have tended to lower risk as energy demands drop, while economic prosperity can increase the risk.

"It’s not like a light switch, this is not an either-or proposition," Harbert said. "Energy security moves along the spectrum; we’re either less secure or more secure, and there are lots of variations in between."

An Energy Crossroads 

The index comes along at an apparent energy-security turning point in America.

The weeks-long oil spill in the Gulf of Mexico has divided environmental groups and offshore oil drilling advocates even more sharply than before. The two sides are pointing to a need for better energy security, with arguments for and against moving away from conventional energy, depending on who you ask.

The Senate’s climate and energy bill, the American Power Act, introduced by Sens. John Kerry (D-Mass) and Joseph Lieberman (I-Conn.) earlier this month, would at least begin an overhaul of the U.S. energy system. At its core is a cap-and-trade market to regulate greenhouse gases with a mandate to slash emissions 17 percent below 2005 levels by 2020. The bill, which has slim chances of passing, also contains hefty handouts and generous subsidies for nuclear energy and natural gas. 

The Chamber of Commerce, known for its retrograde stance on climate policy and skepticism of global warming science, says the new index is a "powerful tool" for measuring whether future legislation will make the nation more or less energy secure.   

Climate advocates are likely to find that claim suspect at best, given the group’s past lobbying activities.

In 2009, the Chamber launched a highly publicized campaign to kill the Waxman-Markey American Clean Energy and Security Act that narrowly passed the House last June, claiming it would wipe out domestic jobs. Largely as a result of those efforts, six major companies quit the group’s board of directors, including utility giants Duke Energy and Exelon, while many other members have openly criticized the Commerce.

According to Harbert, the institute’s goal with its new research is to size up legislation based on data not "ideology."

"If there is a piece of legislation on Capitol Hill, we can actually put it through this index and say to whoever the sponsors are, this might actually increase our risks in this manner, or it might decrease our risks," Harbert said.

"And I think that will be a very powerful tool for professionals, for policymakers, to make assessments that are based on quantifiable data rather than on intuition, rather than on narrative, rather than on rhetoric, rather than on ideology."

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