Russia, which ranked as high as No. 9 in 2005, fell to last place in the most recent quarterly update of the global Oil Security Index (OSI), released by Securing America’s Future Energy (SAFE), the nonpartisan organization dedicated to the reduction of US dependence on foreign oil.
The OSI measures the oil security of more than a dozen countries around the world based on key indicators, including their structural dependence on oil, their economic exposure to the global oil market, and their capacity to respond to oil supply disruptions, SAFE said.
It said Russia dropped to last place during 2013’s final quarter, partly due to its extreme reliance on oil export revenues and the Russian economy’s relatively high oil intensity, which is about 8 times higher than the most efficient countries. Russia depends on oil exports for 51% of its total export revenue, making it second only to Saudi Arabia in that respect, SAFE said.
“Oil security means different things for different countries based on individual economic and structural factors,” noted SAFE Chief Executive Robbie Diamond. “That is one of the key lessons of the index. So while countries like Russia and Saudi Arabia may be global leaders in oil production, they remain extremely vulnerable changes in global oil prices.
“This is useful insight for US policymakers as they are increasingly forced to grapple with geopolitical events,” he said, adding, “We cannot ignore the importance of oil when dealing with allies and adversaries around the globe.”
US demand climbed
The US, meanwhile, fell one slot in the OSI’s rankings from fifth place during third-quarter 2013 to the No. 6 spot in the year’s final quarter. While increasing production has reduced US imports and improved the nation’s energy security in recent years, SAFE said the US remains the world’s largest oil consumer, accounting for 20% of total global demand.
It said the country’s fuel consumption per capita metric is the second-highest in the OSI, and US oil intensity remains higher than many of its developed country peers. Such high levels of economy-wide oil consumption, which increased by about 800,000 b/d year-to-year in first-quarter 2013, leave the nation exposed to price volatility and supply disruptions, according to SAFE.
“Contrary to people’s expectations, we saw significant growth in US oil consumption in late 2013,” Diamond said. Domestic demand had its largest year-to-year increase since 2004, which helped drive a notable increase in spending on oil, he noted.
“This suggests that increasing production and declining import levels alone are not sufficient if the United States wants to achieve greater energy security,” Diamond said. “We also need to be heavily focused on reducing the role of oil consumption in our economy through greater efficiency and fuel diversity.”
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