Taming the volatility curse: the critical moderating role of governance and efficiency in achieving energy security in MENA

Abstract The impact of natural resources on energy security has recently gained prominence in resource research, with mixed empirical findings. A concurrent academic interest, fueled by ongoing global instability, is based on increasing evidence that it is the volatility of resources, rather than their abundance per se, that drives the resource curse, yet no prior study has directly tested this proposition in the context of energy security. This study addresses this gap by providing one of the first empirical test of the hypothesis that volatility, not abundance, is the primary channel through which natural resources affect energy security, and by exploring the nonlinear, threshold-dependent roles of governance and energy efficiency as moderators of this relationship. Using a System Generalized Methods of Moments estimator to data from 13 Middle East and North African countries—major global energy consumers—this study confirms that resource abundance positively affects energy security, whereas volatility significantly undermines it. The moderating effects reveal complex dynamics: governance and energy efficiency substantially alter the volatility–energy security nexus, with sign reversals indicating threshold-dependent relationships. Specifically, this study identifies a governance policy threshold (2.03, on a scale of −4.85 to 3.61) beyond which complementary policies are essential to mitigate volatility. An avoidable energy inefficiency threshold (1.53, on a scale of 1.07 to 2.78) is also identified, beyond which volatility’s negative impact intensifies. These findings underscore the need for integrated policy responses, including governance reforms, enhanced energy efficiency, economic diversification, renewable energy partnerships, and fiscal stabilization mechanisms to enhance energy security in resource-dependent economies.