Report: Global Risk to Oil Supply Will Grow

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Headline: Panel: Risk to Oil Supply Will Grow

Source: Associated Press, 14 Feb 2001

WASHINGTON (AP) -- Global energy demand will grow sharply over the next two decades with continued reliance on Persian Gulf oil producers and an increased risk of supply interruptions, a panel of energy and global security experts warns.

While there will be growing dependence between energy suppliers and consumers, ``the risks posed by supply interruptions will be greater'' between now and 2020 than they have been in recent years, the panel said in a study.

``We are vulnerable to any event disrupting energy supply or demand anytime, anywhere,'' said Robert Ebel, director of the Center for Strategic and International Studies energy project that development [AP typo: developed?] the report.

Ebel said at a news conference that U.S. energy policy must shift way from a domestic to an international focus to address future energy markets in which developing countries increasingly will compete with the United States and other industrial countries for oil.

Despite recent price and supply shocks, world consumers of energy, including U.S. policy-makers, have been too complacent about ``the fragility of reliable and timely (energy) supplies,'' the report said.

The result of a three-year world energy project by the Center for Strategic and International Studies, the report was worked on by a task force of private and public-sector energy and global security experts headed by former Sen. Sam Nunn of Georgia and James Schlesinger, former energy and defense secretary in the Carter, Nixon and Ford administrations.

Sen. Frank Murkowski, R-Alaska, who joined Ebel releasing the report, argued that global instability requires the United States to reduce its reliance on oil imports. With 56 percent of U.S. oil demand met through imports ``we are sacrificing our national security,'' said Murkowski.

By 2020, half of all the petroleum used by the world ``will be met from countries that pose a high risk of internal instability,'' the study said, predicting that a crisis, perhaps even military conflict, is ``highly likely'' in one or more of the world's key energy producing countries.

Furthermore, it said that Iran, Iraq and Libya, each of which are under sanctions by either the United States or United Nations, are likely to ``play an increasingly important role in meeting growing global (energy) demand.''

While not commenting specifically on any of the three countries, the task force urged U.S. policy-makers to ``avoid the indiscriminate use of sanctions,'' saying they are ``not an effective policy tool'' and hinder needed energy production.

The study, however, did not focus on the question of imports vs. domestic production, although it predicted in the coming years ``U.S. net oil imports will continue their steady growth.''

Instead, it urges a series of policy directions aimed at developing closer ties to leading global oil producers and warns that only the United States will be able to ensure the continued flow of energy supplies.

The study questioned whether the United States, with its current commitments in northeastern Asia, will be able to respond militarily to an energy crisis in the Middle East, such as it did in the 1990 Gulf War.

Among other task force findings are that over the next 20 years:

-- World energy demand will increase by 50 percent and at some point developing countries, led by China, will begin to consume more energy than the developed countries.

-- The Persian Gulf will remain the key supplier of oil to world markets with its production expected to expand by 80 percent, but only with the help of foreign investment.

-- Electricity will be the most rapidly growing sector with the greatest increase in Asia and Central and South America.

-- Technologies must be found and developed to make use of fossil fuels environmentally friendly and still economical.

-- There will be an increased threat of terrorist attacks on oil and gas pipelines.

``One of the ironies at the turn of the century,'' concludes the study, ``is that in an age when the pace of technological change is almost overwhelming, the world will remain dependent, during 2000-2020 at least, essentially on the same sources of energy -- fossil fuels -- that prevailed in the 20th century.''

------ On the Net: Center for Strategic and International Studies: http://www.csis.org/



-- Andre Weltman (aweltman@state.pa.us), February 14, 2001

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