Energy Security of Supply and Security of Demand

By: Professor. Satoshi Ikeuchi, Professor, Global Security and Religion, University of Tokyo.

Countries on the Northern and Southern shores of the Gulf were on the brink of war and barely saved by President Trump on June 20. Strangely, Mr. Trump himself was the one who pushed the Gulf countries to that point and then changed the course himself.

Tensions will continue to be high in the foreseeable future and the possibility of unwanted and accidental conflicts persist to be there. Suspicious incidents continue to happen and each of them potentially leads us to large scale conflict in the Gulf.

We need to think back again and find a way out of this predicament.

It was sensible that the UAE government does not point a finger to anyone or any entity in its condemnation of consecutive incidents occurring in the UAE territorial waters which can be easily exploited to cause an open military confrontation.

A military conflict across the Gulf is detrimental to anyone who is involved in this globalized world economy. The infrastructure of Gulf oil-producing countries which is maintained by delicate and advanced technology and attended by skilled foreign workers would be hard hit in the outbreak of regional war. President Trump’s dangerous game of chicken reminded us the vulnerability of the affluent lifestyle of the Gulf countries. 

It is of concern for East Asian oil consuming countries like Japan which are largely depend its energy security on the imported oil from the Gulf region.

“Energy security” has two parts and not one of them is independent of the other. One is the “security of supply” which is of consumer countries’ concern to secure stable supply of oil and gas from oil producing countries. The other is the “security of demand” which is for oil producing-exporting countries in need of large scale consumers in a long term. Without them, large oil reserves are no use.

Demand and supply are two sides of the same coin and both producer and consumer countries of oil must coordinate and cooperate in their actions.

If this level of heightened tension continues and fear of the disruption in the transit routes and chokepoints of the oil transportation persists, there might emerge a concerted effort on the side of oil importing countries in diversifying energy resources to avoid the excessive dependence on the Gulf oil or even to avoid the reliance on oil itself.

Security of supply and security of demand must go hand in hand and if they are separated, both can’t stand.