Abstract
Energy security is one of the primary goals of the European Union energy policy as the region relies mostly on imports to meet its energy resources demand. In 2013, the share of the net imported energy resources was as high as 54.5% of total energy consumption in the 28 member states of the European Union. Research on energy security involves a detailed analysis of economic, technological, and socio-political factors. The main objective of this study is to find out the economic consequences in the short run due to changes in the level of the security of energy resources supply. In order to acquire quantitative measures of the research object, the energy security index calculation methodology proposed by Jansen et al. (2004) is applied. To explore what effects, if any, energy security has on the economy of the EU, five economic indicators, with which the probable short-term impact of energy security is the most likely, are distinguished: real GDP, inflation, current account balance, foreign direct investment, and employment. Granger causality tests of the panel VAR model reveal that in the short run employment may be negatively affected by energy security. The effect itself is relatively small and short-lived. No short term causality is observed running from energy security towards the remaining macroeconomic variables of the panel VAR model. Such conclusions would suggest making the European Union energy policy decisions without prioritizing possible swings of the energy security level in the short run.
Highlights
Energy consumption is historically an inherent aspect of economic activities that creates value-added output
This study is one of the first attempts to explore the relationships between the energy security level and various macroeconomic indicators
The analysis presented in the paper reveals that energy security in the short run negatively influences the employment level in the economies of the EU countries
Summary
Energy consumption is historically an inherent aspect of economic activities that creates value-added output. Net imports of energy secured 70.4% of TPES in Lithuania in 2013, lacking proper diversification of energy suppliers and types of energy sources in its energy mix. Another highly energy-dependent countries include Estonia, Ireland, and Poland. Countries like Denmark, Sweden, and Romania have broadly diversified energy-mixes and locally produce the majority of consumed energy. As a result, they are among the most energy secure countries in the EU. The objective of this research is to examine how the economy of the European Union is affected by energy security in the short run. Conclusions and policy recommendations are provided in the fifth chapter
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