Energy security, public policy, and the role of the DOE Office of Energy Emergencies

Abstract

This paper addresses the concept of energy security, the costs and benefits of energy security, and policies which could potentially alter these costs and benefits. These issues are considered from the perspective of the DOE's Office of Energy Emergencies, with the goal of determining if alternative or additional roles should be open to this Office. The approach taken is limited to the economic costs and benefits of energy security, reflecting our view that the bulk of important energy security issues can at least be approached from this perspective. An energy emergency results from a sudden change in the quantity, market price, and/or social value of energy, in combination with a domestic and/or world wide energy system that cannot rapidly adjust to that change. We do not believe that mitigating the impacts of such events is always necessary, nor that it is uniquely a governmental responsibility. In fact, the first recourse in emergency preparedness should always be to the private sector. Government should deal with three different aspects of emergency energy activities. First, it should condition the decision making environment by seeing that adequate information about energy conditions is available and that its own policy position is clear. Next, it shouldmore » evaluate the preparedness measures undertaken by the private sector. Finally, if it finds private sector preparation to be inadequate, government has a variety of direct and indirect means with which to intervene. One direct measure currently used is the buildup and drawdown of the strategic petroleum reserve (SPR). Others include contingency plans to override market allocations during wartime, as might be developed under the graduated mobilization response (GMR). Indirect means include a variety of tax and transfer schemes that alter existing private sector incentives to prepare. Well conceived monetary and fiscal policies complete the tools. 1 fig., 1 tab.« less