Energy Security in Malaysia: Magnitude and the Economic Effects

Abstract

The study applies key indicators of the energy security vulnerability index to examine the sensitivity and vulnerability of the Malaysian economy to energy supply disruptions and further test the potential impact of this energy supply disruption indicators on major economic indices such as the GDP and trade balance. The results from the analysis of the historical data and future projections of Malaysia's primary energy supply portfolios suggest that Malaysia exhibits a highly diversified energy portfolio with an inclination towards reduction if the present trend is not checked. The estimated vulnerability index also indicates that the direct impact of oil supply disruptions on the economy of Malaysia is high compared to coal. The dominance of gas in electricity generation also implies a relatively low carbon-free fuel portfolio. The implication is that Malaysia has been increasing GDP with less energy import dependency and more energy diversification but with less carbon-free portfolios -a case of environmentally non-sustainable growth.