The most serious challenge posed by the energy crisis is not high oil prices, low inventories or the fact that consumers are using oil much faster than we find new resources. It is the damage oil dependence poses to international security. Unless we integrate energy and foreign policy and treat energy security as a priority, we will suffer economic pain and a more dangerous world.

Even if the US and the European Union had a focused technology strategy, greater incentives for hybrid cars and alternative fuels and more aggressive fuel economy standards, we could not reduce the world's dependence on oil from Saudi Arabia, the United Arab Emirates, Iran, Venezuela and Russia for at least two decades. Worse still, even assuming progress in efficiency, the world will need to extract almost twice the volume of oil we use today, with ever more of those resources coming from the Organisation of the Petroleum Exporting Countries.

This challenge means the US, our allies and big consumers such as China and India will compete for access to countries that allow foreign investment in their energy sectors and will compete for favour with those such as Russia and Venezuela that are limiting foreign development and using oil to expand political influence. Unless we change our foreign policy course, for the next two decades we will enrich Opec and producers that maintain high prices and weaken the ability of the US or allies to influence these countries.

This transfer of wealth will also deepen the hold of undemocratic leaders in oil producing nations, further enable the repression and underdevelopment that fosters terrorism, and finance nuclear proliferation in Iran and weapons proliferation in Africa. Consumers do not bite the hand that feeds them: the Middle East is feeding Asia its oil and gas, Russia is feeding Europe natural gas and Venezuela is subsidising oil and products in Latin America and the Caribbean.

US influence will continue to wane as our allies depend on our adversaries and competitors for energy. Russia's dispute with Ukraine, which led to reduced gas supplies to Europe, underlines the need for a collective energy security strategy that moves countries away from coercion to collaboration.

The US and other Organisation for Economic Co-operation and Development members must revive the vision and courage of 1974 and restore control of our strategic future. First, we must press for a new producer-consumer compact, in which producers agree to increase capacity through shared investment from consuming nations and consumers increase efficiency of energy use. This compact should be a top priority of our energy diplomacy, offering a realistic alternative to the dead ends of producer-consumer confrontation and the current spiral of increasing prices and consumption.

Second, we must expand the um-brella of collective energy security by strengthening multilateral technology co-operation in efficiency and conservation and, more immediately, by opening access to strategic reserves and the OECD's co-ordinated Emergency Response System to China and India so their sense of energy insecurity does not convert them into adversaries. China is seeking to lock up long-term contracts rather than rely on the market system created by the west because it has no safety net. We need to pull it into the market system, not lock it out.

Third, we must align ourselves with reform-oriented opinion leaders who support transparency and political and economic opportunity in the oil producing nations so we do not lose the hearts and minds of their citizens. Fourth, we must begin to build our strategic reserves to keep up with consumption. Fifth, we must lead by domestic example. The US should adopt a national technology strategy focused on transport, rather than the patronage-driven hodge-podge of current programmes.

The objective is to increase energy security and interdependence. It should be recognised, however, that certain governments will hold out for the current state of affairs. For those, it may prove necessary to use our power as consumers to press them to open their markets to energy trade and investment, as we open ours for manufacturing and services. Oil prices are high because most producers do not invest to keep up with demand and refuse to let the free market operate by allowing investment in to produce the supply the world demands. If the US and its partners must discriminate against energy imports from nations that are closed to international investment, let consumers pay a "freedom tariff" that will be invested in technologies to replace the use of petrol to power cars.

There is a forum to advance such a strategy in 2006 and to ensure that Russia is a partner, not a pitfall, in achieving it: the Group of Eight industrial nations plans to make energy security a top priority. By leading with these new initiatives the US can increase energy supply, manage demand, lower prices, restore its international leverage and manage its way through the next two decades, until the day when hydrocarbons do not drive our foreign policies as well as our cars.

 

Jan Kalicki is former counsellor to the US Department of Commerce; David Goldwyn is former assistant secretary of energy for international affairs. They are co-editors of Energy and Security: Toward a New Foreign Policy StrategyJAN KALICKI and DAVID GOLDWYNPartnership is the energy security key