Energy security has been a key element of international politics since the beginning of the twentieth century. All the countries of the world, be they industrialized or agricultural, major or minor, consume energy, and are at the same time keen to secure and diversify their energy supplies, so as not to rely on a single source in order to avoid possible disruption at a given moment, or sudden hikes in prices that would undermine their economic growth and competitiveness. Then in our modern times, the concept of energy security has evolved beginning with the early seventies, when the Arab oil exporting countries boycotted the United States and the Netherlands because of their support for Israel in the Yom Kippur War of 1973. Since then, the Western industrialized countries have raised the concept of the security of energy supplies in the face of oil-producing countries, in order to increase or exaggerate their demands. The former U.S. Secretary of State thus rushed to call for the establishment of the International Energy Agency in 1974, with the aim of addressing the issue of the energy security of the major industrialized countries. However, the notion of energy security is not limited to oil-importing countries. The oil-producing nations, too, have begun to demand the oil-consuming countries to reveal their plans for demand on oil and gas in the future, and the type of fuel these countries will rely on, in order for the oil-producing countries to adequately plan their large petroleum projects, each costing billions of dollars, and also in order to establish that there will be adequate markets for their exports in the future. Some countries try to overblow certain events and developments, to claim that the disruptions of energy supplies in a certain period may harm their interests, and even bring industry and everyday life, including power plants and so forth, to a halt. However, it is clear that the majority of these countries, especially IEA member states, have been stockpiling oil since the mid-seventies for strategic purposes, to be able to offset shortages in the event of disruptions in regular supplies. In fact, this is exactly what is taking place today. The best example of this is the energy situation in Italy. The Italian group ENI is the largest international oil company operating in Libya. Further, Italy relies heavily on oil and gas imports from Libya. Hence, there was a belief upon the stoppage of oil production in Libya since mid-March, that Italy would see a major shortage in energy supplies. However, Italy has managed to overcome the disruption of Libyan oil supplies, thanks to its reserve inventories. This was confirmed by the Italian energy regulator (AEEG)'s annual report published in the first week of July, which mentioned that there are adequate quantities of energy available to meet the expected demand this year, even without the Libyan supplies which the country largely depends on. However, the report, at the same time, expressed concerns that prices may rise as a result of Libyan supply disruptions, which is indeed the case at present. Nevertheless, the increase in prices had started a relatively long period of time before the disruption of Libyan supplies took place, or indeed the Arab uprisings. On the other hand, the IEA Secretary General Nobuo Tanaka said on July 19 in Tokyo that the agency is consulting with member states over the possibility of tapping into the strategic reserves for a second time since July, with a view to supply the markets with approximately 60 million additional barrels throughout the month, or the equivalent of an average of two million barrels per day. But according to Tanaka, only 12 out of 28 member states have heeded the request to tap in to their reserves, and that the average of what has been withdrawn from the reserves in total is around half a million barrels per day. The IEA Secretary General also confirmed that the IEA member states have adequate reserves to cover a period of 24 months, or two years. But what do such reports and statements actually mean? They mean that there is enough oil in the strategic reserves of the Western industrialized nations to mitigate shortage from important oil-exporting countries such as Libya, for a long period of time. They also mean that the oil-exporting countries, especially OPEC member states, are taking into account the need to supply oil to strategic and commercial inventories in consuming countries, and not only their actual consumption. They also mean that the OPEC producers are shouldering their responsibilities in exceptional times to offset the shortage in supplies, whether this involves an OPEC member, as is the case in Libya or Iraq at present, or as a result of devastation for example in the aftermath of Hurricane Katrina in the Gulf of Mexico, and the ensuing shortage in American oil and gas production at the time. This means, among other things, that OPEC does not work only for quick and short-term gains, but also to foster stability in the markets in exceptional circumstances, and subsequently to extend the shelf life of oil. Of course, this is not an act of charity. Instead, it is in the interest of major oil-producing countries to protect the stability of demand for oil by ensuring that no shortage in supplies takes place, or no major global economic crises push consumers to use other types of fuel. Finally, there is the significance of the role of energy security for the oil-producing countries themselves. The latter spend tens of billions of dollars annually to develop their petroleum industries. But what guarantee do they have that demand for oil and gas will remain at the same levels over the medium and long terms? This is an especially valid question given that the primary sector in terms of oil consumption at present is the transportation sector. Alternative fuels have managed to acquire a large share in terms of supplying energy to other economic sectors, such as power generation and petrochemical plants. Moreover, the large and growing interest in climate and the environment is putting more and more pressure on oil, not to mention the rise of taxes levied on petroleum products. Of course, all this does not mean that the oil age has come to an end. However, they are indeed important indications that the annual growth of demand for oil may shrink or not be at the same optimistic levels planned for by some oil-producing countries. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
