Security of supply of energy has become one of the most popular buzzwords of political and economic debates; its pursuits in a way have started to resemble the quest for the Holy Grail. Many different deeds and actions are being justified in the name of security of supply ranging from investment in intricate technology to agricultural subsidies. Therefore, there is a need to look at government policies and to evaluate how effective they are in achieving the goals of security of supply, and to distinguish what effects such policies will have.

 

Governments tend to interfere into energy sector, to shape it, to push into a direction they think is suitable. Governments usually seem to think they have all the answers, and in fact, faced with voices who demand to “do something about high energy prices” they are more than eager to go and “do something”.

 

This paper aims to evaluate Europe’s attempts to increase the security of supply concentrating more on the Baltic region and Lithuania. However, because of the global nature of energy market and because the countries discussed are EU members inevitably many aspects that are discussed in this paper are of the global dimension, and apply not only to those states.

 

Matters of highly political nature, like whether to let Russian energy companies to invest into distribution networks are not going to be discussed partly because they do not represent comprehensive economic policy, partly because there is not enough information available to create a level analysis.

 

The first chapter tries to provide an answer to the question “will we run out of energy?” which seems to have regained a lot of its popularity and connects to the question of security of supply of energy in a very fundamental way. Then paper goes on to overview government intervention in energy sector and how this intervention affects the sector. The fourth chapter analyzes Europe’s attempts to deal with security of supply and deals with recently proposed EU energy policy. The fifth chapter analyzes different energy sources of the EU and evaluates them in terms of security and cost, since these are the two elements that define security of supply of energy. The sixth chapter examines the Baltic region more closely and makes comparisons between Europe, the Baltic region, the Baltic states and Lithuania. The seventh chapter looks at how EU and national regulation impact the development of energy sector in the Baltic region and specifically Lithuania. Finally, conclusion sums up the paper.