The Energy Security Dilemma

This article, which appeared in the GAO Journal, No. 2, Summer 1988, discusses the current energy situation, future trends, and the dilemma the situation presents to the United States and other industrial nations. Since the 1970 oil shortages, many nations have made major changes in the world oil market to ensure their energy security through energy efficiency, development of additional resources, the build-up of strategic oil stocks, and reductions in reliance on the oil-producing nations. Because most of the known oil reserves are heavily concentrated in the Middle East, diversification in supply sources is important in ensuring energy security. In addition, slow and steadily rising prices would stimulate new energy projects, encourage development, and support more efficient use of energy. To avoid the dilemma of unacceptable risks at unreasonable costs, the United States needs to: (1) continue to develop its Strategic Petroleum Reserve (SPR); (2) reduce the use of oil for transportation; (3) develop alternatives to SPR; and (4) encourage improved energy efficiency.