Assessing the vulnerability of oil-dependent countries in Europe

Abstract

In this article, we attempt to assess the vulnerability of European oil-dependent countries, using the Weighted Russell Directional Distance Model, which provides a composite index and allows for the analysis of adjustments in different proportions for the evaluation factors to reduce oil vulnerability. Our empirical findings show heterogeneous degrees of vulnerability to oil across countries due to country-specific characteristics. More precisely, Slovakia, the Czech Republic, Sweden, France, the Netherlands, and Spain emerged as the least oil-vulnerable countries. Conversely, Hungary, Poland, and Portugal performed poorly regarding oil supply security. Our productivity analysis indicates that inefficient countries that experienced productivity gains primarily achieved them through technological progress, with the Shannon-Wiener index playing a crucial role. These findings align with the EU's strategy of diversifying supply sources.