How is a nations stability, security and strength effected by its energy supply
ID: 2073765 • Letter: H
Question
How is a nations stability, security and strength effected by its energy supply and energy usage?
How is a nations stability, security and strength effected by its energy supply (imports/production, resources including Fossil fuel/NG/nuclear/renewable), & energy usage (Usage in Residential, commercial, industrial, transportation, etc.)?
Stability, Security and strength in all four following categories including: economic, political, social, and environmental issues.
How is the effect to be addressed in a global point of view, not limiting on one or two countries.
Trusted data and sources please.
Thank you very much!
Explanation / Answer
Energy is the “oxygen” of the economy and the life-blood of growth, particularly in the mass industrialization phase that emerging economic giants are facing today as their per capita GDP moves between approximately US$ 5,000 and US$ 15,000.
In times of economic turbulence, the focus quite rightly falls on jobs. The energy industry is known for being highly capital intensive, but its impact on employment is often forgotten. In the United States, for example, the American Petroleum Institute estimates that the industry supports more than nine million jobs directly and indirectly, which is over 5% of the country’s total employment. In 2009 the energy industry supported a total value added to the national economy of more than US$ 1 trillion, representing 7.7% of US GDP.
Beyond its direct contributions to the economy, energy is also deeply linked to other sectors in ways that are not immediately obvious. For example, each calorie of food we consume requires an average input of five calories of fossil fuel, and for high-end products like beef this rises to an average of 80 calories. The energy sector is also the biggest industrial user of fresh water, accounting for 40% of all freshwater withdrawals in the United States. The energy industry significantly influences the vibrancy and sustainability of the entire economy – from job creation to resource efficiency and the environment.
The key factors in maintaining the health of this nexus of resources (energy, food and water) are sustained investment, increased efficiency, new technology, system-level integration (e.g. in urban development) and supportive regulatory and social conditions. Looking towards the decades ahead, this nexus will come under huge stress as global growth in population and prosperity propel underlying demand at a pace that will outstrip the normal capacity to expand supply. To face this strain, some combination of extraordinary moderation in demand growth and extraordinary acceleration in production will need to take place.
New and healthy forms of collaboration that cross traditional boundaries, including national, public-private, cross-industry and business-civic, will be required to address these challenges. Frameworks that encourage collaboration while also being respectful of the different roles of different sectors of society will need to be developed rapidly.
While easy to say, this could prove difficult to achieve. These types of economic stressors could lead to turbulence as well as political volatility. If the impacts of these stressors are distributed unevenly across society, suspicion, blame and a deeply felt sense of injustice among many people could follow. From this, hostility and opposition could arise even to investments that would ultimately help relieve the strain on resources. So we must achieve a renewal of the deep social contract between industry and the rest of society as a fundamental and mutually respectful backdrop for individual developments, investments and services.
ROLE OF ENERGY IN JOB CREATION
The energy industry contributes to economic growth in two ways. First, energy is an important sector of the economy that creates jobs and value by extracting, transforming and distributing energy goods and services throughout the economy. As an example, in 2009 the energy industry accounted for about 4% of GDP in the United States. In some countries that are heavily dependent on energy exports the share is even higher: 30% in Nigeria, 35% in Venezuela and 57% in Kuwait.1 The energy industry extends its reach into economies as an investor, employer and purchaser of goods and services.
The energy sector directly employs fewer people than might be expected given its share of GDP, especially when compared to other industries. Figure 2 shows the share of energy sector employment compared to other sectors in several OECD countries. In Norway, energy-related industries account for 20% of business sector GDP but just 2.3% of business sector employment. Norway’s wealth may be in oil, but that wealth supports other sectors, especially service industries. More than eight times as many Norwegians work in healthcare as in energy extraction.
Nonetheless, recent research in the United States demonstrates that the energy industry supports many more jobs than it generates directly, owing to its long supply chains and spending by employees and suppliers. As Senator Hoeven explains in his contribution, North Dakota: The New Frontier of American Oil, “Jobs in the oil industry create spending power and generate the need for services of many other kinds. Thus, many more jobs are created – a multiple of those in the oil industry itself.” Chapter 2 explores these impacts using the United States as a case study.
Energy-related industries do not have a large need for labour, but the workers they hire are relatively highly skilled and highly paid. For example, compensation per worker in energy-related industries is about twice the average in Germany, Norway, the United Kingdom and the United States and four times the average in Mexico and South Korea.
As a result of their high salaries, employees of the energy industry contribute more absolute spending per capita to the economy than the average worker. High wages in the sector reflect the fact that energy industry workers are much more productive than average, contributing a larger share of GDP per worker than most other workers in the economy.
Maximizing the economic
Energy resource development has the potential to bring wealth and prosperity to regions where extraction takes place. But the previous chapters demonstrated that direct job creation from the industry is relatively small. Much depends on the capacity of local suppliers and how the revenue from resource extraction is spent. How can countries with an endowment of energy resources develop them to maximize the benefits to the economy as a whole? Success depends largely on the choices that resource-rich governments make about taxes on extraction and energy pricing, whether they promote a related industrial base and how they decide to use the revenue from extraction.
Economic growth in emerging markets has rapidly increased energy demand globally, especially in the large-population countries of Brazil, India and China as well as in the Middle East. In addition to overall increases in energy demand, many developing economies are seeking ways to maximize their power generation capacity to ensure that power shortages do not hinder growth.
Many individuals in developing countries experience inadequate or unreliable access to electricity. In its 2011 World Energy Outlook, the IEA reports that 1.3 billion people, or 20% of the world’s population, lacked access to electricity in 2009. Eighty per cent of these people were located in Sub-Saharan Africa and South Asia. Shortfalls in electricity supply hold back business and economic growth in the world’s poorest countries. Since energy is a key input for nearly all goods and services, inadequate energy access lowers productivity, competitiveness and employment. According to one study based on 2005 data, electricity outages in Sub-Saharan Africa resulted in an economic cost of 2.1% of GDP.3 Brian Dames emphasizes the importance of power access in his contribution, Equitable Access to Energy: a Driver for Jobs, Healthcare and Education. “Eskom’s most important job is to provide an uninterrupted supply of affordable electricity to support economic growth and help the country move towards a cleaner future, thereby improving the quality of life of the people of South Africa”, he writes. Dames reiterates, “Inadequate power supplies take a heavy toll on the private sector, and the economic costs of outages are substantial.”
Energy politics
Solving the energy crisis is going to take a lot of social action combined with government support. Rising energy costs are finally starting to force global leaders to research alternatives and provide the funding to make changes. Issues like global warming are becoming mainstream reality and causing worldwide concerns about pollution and consumption. Hopefully our civilization will agree to put in the effort needed to save our planet. The articles on this page discuss the politics of renewable energy and change.
Social issue
Energy has both positive and negative impacts on societies. Access to abundant, affordable, secure, safe, and clean energy is beneficial for humans. But energy extraction, transportation, and use can have negative consequences to the health, environment, and economics of a society. Moreover, relying on imported energy can create vulnerabilities to a nation's security. The impacts of energy decisions are not equal for all people. Poor or marginalized societies are more likely to suffer negative consequences of energy decisions because they have a reduced capacity for adaptation and they may lack negotiating power compared to wealthier societies. Therefore, vulnerable populations can benefit greatly from improvements in energy accessibility, safety, or affordability.
This topic also raises the fundamental problem that the world is strongly dependent on a finite supply of fossil fuels. As demand increases and supply becomes scarce, the problem becomes more acute, with potentially severe economic and social consequences. A large-scale transition away from fossil energy poses a great challenge for society.
Environmental issue
All forms of electricity generation have an environmental impact on our air, water and land, but it varies. Of the total energy consumed in the United States, about 40% is used to generate electricity, making electricity use an important part of each person’s environmental footprint.
Producing and using electricity more efficiently reduces both the amount of fuel needed to generate electricity and the amount of greenhouse gases and other air pollution emitted as a result. Electricity from renewable resources such as solar, geothermal, and wind generally does not contribute to climate change or local air pollution since no fuels are combusted.