ABSTRACT
The modern study of energy economics, as well as concerns about energy security, began with the 1973 Middle East oil embargo. Energy security can apply to other potential threats to supply, such as terrorist attacks on the electricity grid. This chapter focuses primarily on energy security as it applies to oil, but also considers electricity security. It presents the measures taken since the 1973 embargo and current issues in energy security. The chapter considers threats to the electricity system in a separate section and evaluates key areas of energy security from a cost-benefit standpoint. Oil issues include the effects of import instability and the military costs of protecting that source of supply. There are potential costs from oil price volatility as well as interruptions in supply. Electricity issues include outages and grid modernization to make the network more secure. The United States has reduced its reliance on crude oil imports due to the domestic production boom and decreased energy intensity.
