Financial Issues Affecting Energy Security

Abstract

Evidence proves that financial issues play a major role in future energy security. One issue is that high energy prices themselves appear to cause recession for oil importers. Another issue is that countries facing debt default and possible bankruptcy are likely to have difficulty paying for energy imports of all kinds. Subsidies are likely to be a problem in countries with financial issues—buyers will demand subsidies because they cannot afford high-priced energy, but energy importers will be increasingly unable to afford to offer such subsidies, as their own financial situations deteriorate. Businesses such as refineries may go bankrupt because customers cannot afford the high price of gasoline, depressing refinery profit margins. Governments in financial difficulty may find themselves short of funds for such tasks as reconnection of electricity after storms. If many people are unemployed because of recession, there may be problems with individuals stealing copper wiring or electricity itself. Nuclear plants may be affected by civil disruption. Oil exporters may encounter difficulties as well, if financial issues lead to a cutback in funding social programs, leading to civil unrest.