This report explores the issue of energy security in the context of a growing dependence of the energy-hungry Asian economies on Middle Eastern supplies.

While some might believe that the world is fast running out of oil, in truth the main threats to energy security are geopolitical rather than physical. For the next 30-50 years, energy disruptions and price hikes are more likely to result from the political and social volatility of the Middle Eastern supplier countries, under-investment in productive capacity by national oil companies, and competitive, predatory behaviour amongst the large consumers, than from the depletion of energy reserves. Australia, if it wishes to play its part in assuring security in an energy-hungry world, should do more than explore increased fuel efficiencies and alternative sources: it should act to soften the geopolitical tensions which are the main threats to stable and reliable supplies, supporting market-based solutions that facilitate trust and promote multilateral cooperation on energy issues.