Measuring the Effect of Political Instability in Middle East and North Africa on Global Energy Security
affiliation not provided to SSRN
October 11, 2011
USAEE Working Paper No. 30
Since the beginning of year 2011, we have witnessed crises and uprisings in the Middle East and North Africa. These regions possess immense crude oil resources. The democracy-seeking movements in Tunisia quickly spread to Egypt, which saw Hosni Mubarak’s three decades of rule collapse. Echoes of these uprisings have been felt in other MENA countries, namely Bahrain, Libya and to a smaller degree, in Iran. Coincidentally (or perhaps not), Mubarak’s fall occurred on the same day the Shah of Iran over 30 years ago. And in both instances, the simple departure of a sovereign led to a spike in crude oil prices.
The obvious geopolitics unrest, combined with the region’s huge energy resources, both underscore the importance of these countries’ role in the global security of energy supplies. In the end, their supplied contribute disproportionally to global energy security.
Interestingly enough, there is no single universally recognized way of measuring a country’s level of energy security. Such assessments are normally a matter of expert judgment, as the perceived risk of a serious disruption or shortfall in investment for any given country or at any given time depends on a large array of different factors. Some of these factors, such as political instability, are inherently difficult to measure.
The aim of this research is to have a quantifiable index for the weighted effect of political instability upon global energy security. This paper identifies the sensitive role of Middle East and North Africa (MENA) in global energy security and that any political instability in this region could influence global energy security. Therefore the effects of political instability in MENA – on the security of the region’s supply – are measured.
To do this, this research utilises the Delphi methodology, explores effective factors on security of MENA energy supplies, in order to be able to compare their effect on the security of supplies with political instability. In the next step, AHP methodology is used to compare and prioritize these factors.
Methods: Delphi, Analytical Hierarchy Process (AHP).
Results: With the help of Delphi methodology, five factors which affecting the security of supplies from MENA countries recognized: political instability, sanctions, underinvestment, threats to transportation and energy investment regulations (in the host countries). These were all compared with each other.
The result of research demonstrates that respectively, political instability, sanctions, underinvestment, threats to energy transportation respectively and energy investment regulations, have the highest to lowest influence on the security of energy flow from MENA. The result of this research also suggests that political instability in MENA has the single greatest affect, at nearly 39%, and that energy investment regulations in MENA countries contribute almost %10 to global energy security.
Conclusions: This research tried to identify factors which influence the security of supply from MENA, a region that has high share in supplying the global energy demand, and it measure the influence of each factor by comparing them with the help of AHP technique.
According to the results of Delphi methodology, five comparable factors affect security of energy supplies from MENA region. These five factors are political instability, sanctions, underinvestment, threats to energy transportation and energy investment regulations in this region. AHP methodology helped to rank and weight these factors by comparing them with each other. The results of the comparison brought to light one interesting fact: political instability in the MENA region has the highest influence on the security of energy supply. This survey also indicates that investment regulation in the host countries the last.
Number of Pages in PDF File: 14
Keywords: Energy Security, Sanctions, Underinvestment, Oil, Security Supply, Middle East, North Africa, AHP, Delphi, Energy Economic
JEL Classification: A10, A11, B22, C00, C1, C10, C20, C30, C40, H10, M10
Date posted: October 16, 2011