Post by Oxford Institute for Energy Studies

Jason Bordoff and Meghan L. O'Sullivan article in latest Oxford Institute for Energy Studies Energy Forum: After Hormuz: Energy Security in a Fragmented World 👉 Link to OIES Energy Forum: https://lnkd.in/e8u-Mc9b Summary points: 🔹 What makes this crisis so consequential is not just the price impacts, but even more that it has exposed, with unusual clarity, how vulnerable the global economy remains to a narrow maritime chokepoint—and to the geography of energy supply in a geopolitically fragmenting world. 🔹 The most important legacy of the Hormuz crisis will not be this year’s energy crisis but the strategic reset this shock accelerates across three dimensions. 1️⃣ Shale revolution means US foreign policy may be less constrained by global energy shocks in the future, potentially widening the geopolitical gap between the United States and its allies. 2️⃣ Crisis confirms the return of energy security to the centre of geopolitics and statecraft. 3️⃣ Crisis may accelerate electrification and low-carbon technologies, but it will also deepen concern about dependence on China. 🔹 There are three major barriers, however, to the hope that today’s heightened energy security risks should simply push countries faster toward clean energy. 1️⃣ In many parts of the world, including South-East Asia, coal is also a low-cost, domestic energy source that provides security of supply and supports large numbers of jobs. A desire for secure and affordable domestic energy does not necessarily mean moving away from all fossil fuels. 2️⃣ If import-dependent regions such as Europe pursue China’s strategy of electrifying more of the economy to reduce oil and gas use, they risk swapping one form of dependence for another: significantly greater reliance on China for clean energy products and technologies. 3️⃣ If governments place greater weight on reducing imports, electrifying, and producing more energy at home, the resulting energy system may require greater up-front investment and could be costlier to operate. Yet this crisis will also slow growth, weaken public finances, and increase pressure on governments to spend more on military security and rebuild depleted munitions stockpiles. The fiscal space to pursue a more capital-intensive, low-carbon, domestic energy agenda will therefore be narrower. #hormuzcrisis #energysecurity