Energy is the new gold in an uncertain world

The era of predictable energy markets is coming to an end. Recent tensions in the Middle East are not an isolated disruption-they reflect a deeper transformation in how energy shapes economic stability.

Energy is no longer just a commodity. It is a strategic asset. In an uncertain global economy, access to reliable and affordable energy is increasingly defining economic resilience, policy choices, and long-term growth.

For decades, the global economy operated on an assumption of energy stability. Oil moved through predictable routes, supply chains functioned with remarkable efficiency, and markets absorbed shocks with relative ease. That foundation is now under strain.

Today, even the possibility of disruption is enough to move markets. The Middle East accounts for roughly one-third of global oil production, and nearly a fifth of global supply passes through the Strait of Hormuz. When tensions rise, so do prices, insurance costs, and uncertainty-transmitting shockwaves across economies far removed from the conflict.

These effects are immediate. They surface in higher fuel prices, rising transport costs, and mounting pressure on household budgets. Inflation, once thought to be under control in many economies, re-emerges with renewed force.

For energy-importing countries, the impact is particularly acute. Across much of Asia, dependence on imported oil and gas remains high. In many economies, energy accounts for 20-30 per cent of total import bills, leaving them highly exposed to global price volatility.

This dependence quickly translates into domestic economic stress. Governments are forced into difficult choices: pass on higher costs and risk social pressure, or absorb them through subsidies and weaken already constrained fiscal positions.

But energy shocks do not stop at fuel.

They cascade through supply chains. Higher shipping costs affect trade flows. Industries that rely on energy-intensive processes-from manufacturing to fertiliser production-face rising input costs. Food systems, closely linked to energy through fertilisers and transport, begin to feel the strain.

What begins as a geopolitical disruption soon evolves into an economic challenge-and, increasingly, a social one.

This is why the current moment demands a shift in thinking.

For years, economic policy prioritised efficiency. Supply chains were optimised, inventories minimised, and production distributed globally. That model delivered growth-but it also created vulnerabilities.

Today, resilience must take equal priority.

Energy security can no longer be treated as a narrow sectoral concern. It sits at the intersection of economic policy, national security, and development strategy. While this recognition is growing, the pace of adjustment must accelerate.

Diversifying energy sources is essential-but it is not sufficient.

The more immediate and often overlooked opportunity lies in using energy more efficiently. The most secure unit of energy is the one that is never consumed. Every unit saved reduces import dependence, lowers infrastructure needs, and eases fiscal pressure.

Yet inefficiencies remain widespread. Transmission and distribution losses continue to be high in many economies. Ageing infrastructure, weak grid management, and inadequate metering systems contribute to avoidable waste.

Addressing these gaps is no longer optional-it is an economic imperative.

Modernising power systems can deliver rapid gains. Smart grids, advanced metering, and digital technologies can improve load management and reduce losses. Artificial intelligence can enhance demand forecasting and optimise supply in real time. Retrofitting older power plants and improving plant load factors can increase efficiency without requiring entirely new capacity.

At the same time, the composition of energy itself must evolve.

Renewable energy-solar, wind, and hydropower-is no longer just an environmental choice; it is increasingly a strategic one. Local energy sources reduce exposure to global volatility and strengthen long-term resilience.

Regional cooperation offers additional opportunities. South Asia's hydropower potential, particularly in Nepal and Bhutan, remains underutilised. Southeast Asia's river systems and geothermal resources offer similar promise. Harnessing these through cross-border energy trade can reduce dependence on distant and uncertain supply chains.

Urban design and behaviour matter more than is often acknowledged. Energy-efficient buildings, better use of natural light, and climate-responsive design can significantly reduce consumption over time. Small changes, when scaled across cities and economies, can produce large cumulative gains.

The objective is not simply to generate more energy-it is to use less energy per unit of growth.

In a world of rising uncertainty, efficiency itself becomes a form of resilience.

The geopolitical dimension of energy is also evolving. In an uncertain global order, energy is not merely traded-it is leveraged. Countries with secure and diversified energy systems gain strategic flexibility. Those heavily dependent on external sources face increasing constraints.

This shift is already reshaping global economic relationships. Long-term supply agreements, strategic reserves, and diversified partnerships are becoming central to policy.

For policymakers, energy policy can no longer be separated from broader economic strategy.

The global economy is entering a phase where shocks will be more frequent, more interconnected, and more difficult to absorb. Energy disruptions, supply chain breakdowns, and financial volatility will increasingly reinforce one another.

In this environment, preparedness is not optional-it is essential.

Energy is the new gold-not because it is scarce, but because it underpins stability in an uncertain world.

But unlike gold, energy is not passive. It must be produced, managed, and used wisely.

Countries that invest in efficiency, diversify their energy mix, and strengthen regional cooperation will be better positioned to navigate this new reality.

Those that do not will remain exposed.

In an uncertain global economy, energy security will increasingly define economic strength-and shape the trajectory of growth itself.

Manmohan Parkash is a former Senior Advisor in the Office of the President and former Deputy Director General for South Asia at the Asian Development Bank (ADB).
manmohanparkash@gmail.com