Energy Security Effects
Concerns about energy security originate from the growing global demand for energy in conjunction with dwindling oil supplies and political instability in the major oil-producing countries. Oil is a commodity that is traded on the global market, and the contributions of rapidly growing economies, such as China and India, to global demand will most likely continue to rise. Coupled with the increased demand, supply shortages have put pressure on the price of oil and created uncertainties that have led to countries striving to become self-sufficient in energy supplies. For example, the ‘20 in10’ Plan in the United States originates from the President’s 2007 State of the Union Address, in which he challenged the nation to support a 20% reduction in gasoline consumption over the following 10 years. One of the reasons prompting the challenge was the growing need for imported oil. According to Henriques and Sadorsky, North America accounts for 30% of the world’s consumption, while only providing 5% of the world’s oil reserves. Hence, a major part of the ‘20 in 10’ Plan is devoted to increasing the domestic supply of renewable fuels in the United States.
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