Ireland's Alarming Reliance on Oil
by Gerard O'Neill, director of Amárach Consulting

Which country is more dependent on oil for its energy - Ireland or Saudi Arabia? The answer, surprisingly, is Ireland - in fact ours is the 7th most oil-dependent economy in the world, and the third most dependent in the EU (after Portugal and Greece, 5th and 6th in the world respectively). Oil makes up 60% of primary energy consumption in Ireland, compared to an EU average of just 43%. Indeed, Ireland is even more dependent on oil for its energy than the United States: the latter is ranked 30th in the world in terms of oil-dependency, with oil providing 40% of its total energy requirements.

It wasn't always this way. Up until the mid- 1990s, Irish oil consumption per capita was below the EU average. However as the chart below shows, we've had a Celtic Tiger in the tank during our economic boom, with the result that Irish oil consumption per capita doubled between 1989 and 2001, whilst that of the EU and the world as a whole remained unchanged: It is worth noting that EU oil consumption in the chart is now lower than it was during the 1973 oil crisis, whilst ours is considerably higher.

In some respects, Ireland's growth in oil dependency is not surprising. After all, we have limited indigenous sources of fossil energy, and so we are dependent on imported oil to 'fuel' our economic growth. Indeed, econometric modelling by Amárach shows that during the period 1986 to 2001:

• A 1% increase in Irish GDP lead to a 1.8% increase in oil consumption, but that

• A 1% increase in EU15 GDP lead to only a 0.6% increase in oil consumption. It would appear that Ireland has an 'oil hungry' economy relative to the European Union as a whole. This has important implications for the future: the bottom line is that our continued economic success is crucially dependent on an expanding global supply of oil at current or lower prices.

Our current standard of living requires that we import some 9 million tonnes of oil every year. If our economy is to grow in the medium term by, say, a modest 3% per annum over the next 5 years, then we will have to import over 12 million tonnes by 2008 - right in the middle of the period in which, if Colin Campbell and other experts are right, the world supply of oil will be beginning to contract.

Source: Amárach calculations based on BP Statistical Review 2002 & Eurostat 2003

This is one of almost 50 chapters and articles in the 336-page large format book, Before the Wells Run Dry. Copies of the book are available for £9.95 from Green Books.

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