Piracy takes greater toll on small Persian gulf energy exporters
Topics: PIRACY GULF EXPORT
"Large exporters of crude oil, such as Saudi Arabia, see little significant long term impact.
"But for smaller countries such as Bahrain or Kuwait that rely on exports of refined petroleum products in addition to crude oil, it's a different story," said Lincoln F. Pratson, Gendell Family Professor of Energy and Environment at Duke's Nicholas School of the Environment.
These countries export much less energy than their larger neighbors, so their exports though smaller in magnitude make up a proportionally larger share of their gross domestic product, Pratson explained.
"Even a marginal slowdown in energy shipping will therefore be more significant to them," he said.
If outgoing tanker traffic from Bahrain drops by just one vessel a year following a piracy attack, that country may experience a 1.6% reduction in its gross domestic product (GDP), the new study suggests.
Kuwait may see a .67% drop in its GDP if its annual export traffic drops by one vessel.
Their reliance on exports of gasoline, diesel fuel and other refined petroleum products adds to the countries' vulnerability.
"Crude oil is a more resilient export commodity because only a few regions produce it.
"If prices rise because of security concerns, demand remains strong.
"But there are nearly 700 refineries worldwide, so when costs for refined petroleum products from the Persian Gulf rise due to piracy, importers can turn to other sources or opt to increase their own domestic production," said Jun U. Shepard, a Ph.D. student in Earth and Ocean Sciences at the Nicholas School and an Energy Data Analytics Fellow at the Duke University Energy Initiative.
"In either case, Bahrain and Kuwait risk losing market share that may not be recovered for years," Shepard said.
Reducing the impacts of piracy on Bahrain and Kuwait's energy exports is important, she added, "not only because we still very much rely on these products, but because the Persian Gulf countries are petrostates that rely on their energy exports as a source of revenue to buy food and other goods that they can't produce on their own."
"If Bahrain and Kuwait can't continue doing this, it could trigger geopolitical instability and civil unrest in the region, which we want to avoid," Shepard said.
"It could also increase the volatility of the global transition from fossil fuels to alternative energy sources." ■