Mightier Than the Sword: Energy Markets and Global Security‪.‬

Dennis O'Brien is Executive Director of the Pacific Economic Cooperation Council and President of the International Association for Energy Economics. The twentieth century has seen the concept of energy security evolve from a framework of military threats and diplomatic responses to one of economic threats and market solutions. As the century draws to a close, energy markets have grown very complex and efficient, with control over those markets widely dispersed among energy consumers, manufacturers, and suppliers. The oil market, for example, has become significantly more efficient since the 1970s: information technologies and market transparency allow refinery managers to select their input blend from a wide variety of crude oils to balance demand for a complex array of products, a demand further complicated by disparate environmental and quality requirements across markets. The intricacy of the system defies traditional government intervention and regulation in times of market stress. Yet the oil market is as critically important as it is complex: the internal combustion engine will remain the major source of transportation power for at least two more decades, and oil will remain its most significant fuel source.