1. International Indexes for Energy Security Risk Daniel E. Klein Christopher D. Russell Twenty-First Strategies, LLC Stephen D. Eule Institute for 21st Century Energy, U.S. Chamber of Commerce USAEE/IAEE 30 th North American Conference Washington DC October 10, 2011

2. – 2 – Going beyond the U.S. ESRI  Energy Security is both local and global  Several U.S. ESRI metrics are int’l, with global values  Int’l events affect several other metrics  Over time, a shrinking U.S. share in world energy markets  Smaller share of world production, esp. oil  Smaller share of world consumption, driven by faster growth elsewhere and energy efficiency here  Increasingly, global market conditions are less influenced by U.S. activity  Communicating energy security risks internationally helps U.S. as well  Energy efficiency anywhere create benefits everywhere  Ditto with shale gas & renewables

3. – 3 – Objectives of International ESRI efforts  Build on the extensive efforts undertaken for the U.S. Index of Energy Security Risk  Concepts and Methodologies  Data and analyses  Extend ESRI logic to other nations  Particularly OECD nations  As feasible, BRIC nations and others  Understand trends in absolute and relative terms  Create additional products and publications for U.S. & international fora

4. – 4 – Need to work within the realm of the possible  Ideally, the U.S. ESRI methodologies could be extended to other countries  Richly detailed U.S. data, complete over long time spans  But … int’l data are a mixed bag  U.S. vs. OECD nations vs. rest of world  Gaps in the historical data, esp. in earlier years  Price & expenditure data particularly weak  Forecasts far less detailed than U.S. in EIA’s AEO  Compromises are sometimes needed between what’s theoretically ideal and what’s realistically achievable  Must work within available data: transparent, credible, etc.  Historical back to 1980, vs. 1970 for U.S. ESRI  20-30 metrics developed or under development. Most have data for all countries; some are OECD-only  No forecast component, at least for now

5. – 5 – Various products under development 1.Int’l Energy Security Risk Index (mainly OECD countries)  A fuller set of security and risk metrics considerations  Many metrics exist for all countries, but others (esp. price & cost) are more limited, generally to OECD countries  Hence, this index has the most depth, but lesser geographic coverage. 2.Fuel Import Exposure (all countries)  Net imports as % of fuel consumption  Do this separately for oil, natural gas, & coal, & also total net fuel imports as % of total energy consumed  Freedom and diversity trends are also incorporated  For each country, absolute & relative to OECD trend 3.Energy Efficiency Trends (all countries)  Energy, transportation, and CO 2 intensities  For each country, absolute & relative to OECD trend

6. – 6 – Charting relative to OECD trends (1980=100) shows countries’ absolute & relative trends 1. Petroleum Fuels, Net Imports as Percent of Consumption 2. Petroleum Production, Freedom & Diversity Trends 3. Petroleum Net Import Exposure, Freedom & Diversity Adjusted

7. – 7 – Interesting data and conceptual issues emerge  Treating fungibility in fuel markets  Differ by fuel?  Differ over time?  Substitution across fuels?  Measuring “security” in global commodity markets  Importance of supply diversity  Importance of economic/political freedom  Global factors over time, or country-specific?  Defining a reference basket of countries  OECD data are better than worldwide data  But since 1980, countries have split up and merged  Different years of entry into OECD  Need to define “OECD-ish” boundaries that are geographically stable over time

8. – 8 – Next steps  Completing data collection and assembly  Complete metrics & develop weightings  Int’l ESRI by year-end  Other products before and/or after  A first word. Not a last word.  As with U.S. ESRI, a two-way communication  Reviewers, advisors, & readers have an important role  Value in engaging in a dialogue  Feedback lets us revise and improve the Index  Expectations of annual updates and extensions

9. – 9 – Thank You! www.energyxxi.org/