Measurement of EU27 oil vulnerability

The purpose of this paper is to compare the security of oil supply of the 27 European Union (EU27) member countries throughout the measurement of the vulnerability that their economies have exhibited to oil during the period from 1995 to 2007. Additionally, the EU27 future oil vulnerability is to be estimated for two indicative scenarios: a low oil price projection and a high price one. The two projections are going up to 2030.

Six indicators that quantify the core concepts that affect the security of supply of a country have been integrated in a synthetic index that measures the vulnerability of the case study countries for the time period under consideration. For the development of the synthetic index the principal component analysis (PCA) has been applied.

The results of this paper are illustrative of the existing vulnerabilities in the oil supply that may signal for a common EU policy addressing the energy availability risk issue.

The main limitation of the analysis is the usage of six indicators in order to capture the core essence of vulnerability and security of supply. The integration of additional indicators in the synthetic index may strive towards a more precise analysis.

The contribution of the paper lies in the usage of a statistical technique, PCA, for the development of a synthetic index that specifies the vulnerability in oil for EU27.