The New Energy Order
Managing Insecurities in the Twenty-first Century
Article Summary and Author Biography
Growing demand for energy in developing countries and calls for greener energy worldwide are putting unprecedented pressure on the global energy system. Existing energy institutions are struggling to remain relevant. A new mechanism for cooperation is needed.
DAVID G. VICTOR is a Professor at the School of International Relations and Pacific Studies at the University of California, San Diego, where he directs the Laboratory on International Law and Regulation. LINDA YUEH is Fellow in Economics at St. Edmund Hall, at the University of Oxford, where she directs the China Growth Center.
The last decade has seen an extraordinary shift in expectations for the world energy system. After a long era of excess capacity, since 2001, prices for oil and most energy commodities have risen sharply and become more volatile. Easy-to-tap local fuel supplies have run short, forcing major energy consumers to depend on longer and seemingly more fragile supply chains. Prices have yo-yoed over the last 18 months: first reaching all-time highs, then dropping by two-thirds, and after that rising back up to surprisingly high levels given the continuing weakness of the global economy. The troubles extend far beyond oil. Governments in regions such as Europe worry about insecure supplies of natural gas. India, among others, is poised to depend heavily on coal imports in the coming decades. For these reasons, governments in nearly all the large consuming nations are now besieged by doubts about their energy security like at no time since the oil crises of the 1970s. Meanwhile, the biggest energy suppliers are questioning whether demand is certain enough to justify the big investments needed to develop new capacity. Producers and consumers, each group unsure of the other, cannot agree on how best to finance and manage a more secure energy system.
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