Third, the longer-term solutions identified in previous discussions about security premiums are still relevant: namely, the need to diversify, shift toward more secure supplies, and reduce consumption of petroleum products. More pathways to these solutions have emerged\u2014most notably, electric vehicles provide a practical alternative to gasoline vehicles.<\/p>\n
At the same time, a new risk has emerged with its own set of similar solutions. What\u2019s now become a security risk for some regions is their increased reliance on natural gas that\u2019s tied to global markets of liquefied natural gas. In the past, these regions would have sought domestic coal, domestic natural gas, nuclear power, hydroelectric power, or renewable energy resources. Now, renewables are much cheaper, and battery storage is available to firm up intermittency. And, in the future, lower-cost nuclear and geothermal energy may provide even more secure options for electricity generation. Policies promoting these approaches can provide net benefits to society by lowering the security premium. Worth noting are the concerns about technologies for which much of the supply chain is in China or other countries that pose a different kind of security risk. These risks, related to capital costs, are fundamentally different than the risks faced by oil and gas, related to operating costs.<\/a><\/p>\n The energy security benefits of these diversification opportunities are highlighted in countries like China<\/a> and Pakistan<\/a>. These countries face very different consequences during the current disruption than other Asian countries, in part based on their choices to expand electric vehicle use and renewables over the past decade. Some countries have begun increasing coal use in response to the war in Iran, making use of idle capacity<\/a>. However, coal has additional environmental costs that otherwise must be managed or factored into any benefit-cost analysis, especially as a long-term energy security solution.<\/p>\n Fourth, a tempting and generally false narrative asserts that limiting trade could be a reasonable, long-term way to improve a nation\u2019s energy security. Here, three points are worth noting. First, the risk of domestic disruptions can increase with limits on trade. Trade provides a way to share and dissipate domestic market risks. Second, limits on trade that reduce US exposure to global risk may increase global risk in other countries\u2014and, as long as the US economy remains broadly linked to other economies, those risks can come back to Americans through global macroeconomic effects. A slowdown or recession outside the United States will reduce demand for US exports and reduce the income derived from US foreign investments. Finally, trade limits can be economically costly. RFF colleagues highlighted this more than 10 years ago<\/a>, in reverse. They demonstrated that eliminating the then-existing ban on crude oil exports from the United States could reduce gasoline prices and increase oil security.<\/p>\n The Sum of the Parts vs Each of the Parts: Energy Price Shocks Are Felt Unequally<\/p>\n","protected":false},"excerpt":{"rendered":"Third, the longer-term solutions identified in previous discussions about security premiums are still relevant: namely, the need to…\n","protected":false},"author":2,"featured_media":398464,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114,85,46],"class_list":{"0":"post-398463","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-il","10":"tag-israel"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/398463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=398463"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/398463\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/398464"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=398463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=398463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=398463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}