Energy crisis

Energy crisis

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. An energy crisis may be referred to as an oil crisis, petroleum crisis, energy shortage, electricity shortage or electricity crisis.


Market failure is possible when monopoly manipulation of markets occurs. A crisis can develop due to industrial actions like union organized strikes and government embargoes. The cause may be over-consumption, ageing infrastructure, choke point disruption or bottlenecks at oil refineries and port facilities that restrict fuel supply. An emergency may emerge during unusually cold winters.

Pipeline failures and other accidents may cause minor interruptions to energy supplies. A crisis could possibly emerge after infrastructure damage from severe weather. Attacks by terrorists or militia on important infrastructure are a possible problem for energy consumers, with a successful strike on a Middle East facility potentially causing global shortages. Political events, for example, when governments change due to regime change, monarchy collapse, military occupation, and coup may disrupt oil and gas production and create shortages.

Historical crises

* 1973 oil crisis - Cause: an OPEC oil export embargo by many of the major Arab oil-producing states, in response to western support of Israel during the Yom Kippur War
* 1979 energy crisis - Cause: the Iranian revolution
* 1990 spike in the price of oil - Cause: the Gulf War
* The 2000–2001 California electricity crisis - Cause: failed deregulation, and business corruption.
* The UK fuel protest of 2000 - Cause: Raise in the price of crude oil combined with already relatively high taxation on road fuel in the UK.
* North American natural gas crisis
* Argentine energy crisis of 2004
* North Korea has had energy shortages for many years.
* Zimbabwe has experienced a shortage of energy supplies for many years due to financial mismanagement.

While not entering a full crisis, political riots that occurred during the 2007 Burmese anti-government protests were initially sparked by rising energy prices. Likewise the Russia-Ukraine gas dispute and the Russia-Belarus energy dispute have been mostly resolved before entering a prolonged crisis stage.

Emerging shortages

Crises that currently exist include:
* Oil price increases since 2003 - Caused by continued global increases in petroleum demand coupled with production stagnation, the falling value of the U.S. dollar, and a myriad of other secondary causes.
* 2008 Central Asia energy crisis, caused by abnormally cold temperatures and low water levels in an area dependent on hydroelectric power. Despite having significant hydrocarbon reserves, in February 2008 the President of Pakistan announced plans to tackle energy shortages that were reaching crisis stage. [cite web |url= |title= Musharraf for emergency measures to overcome energy crisis |accessdate=2008-02-10 |format= |work=Associated Press of Pakistan ] At the same time the South African President was appeasing fears of a prolonged electricity crisis in South Africa. [cite web |url= |title=Mbeki in pledge on energy crisis |accessdate=2008-02-10 |format= |work=Financial Times ]
* South African electrical crisis. The South African crisis, which may last to 2012, lead to large price rises for platinum in February 2008 [cite web |url= |title=Energy crisis upsets platinum market|accessdate=2008-02-21 |format= |work=Nature ] and reduced gold production.
* China experienced severe energy shortages towards the end of 2005 and again in early 2008. During the latter crisis they suffered severe damage to power networks along with diesel and coal shortages. [cite web |url= |title=Coal shortage has China living on the edge |accessdate=2008-03-08 |format= |work= ] Supplies of electricity in Guangdong province, the manufacturing hub of China, are predicted to fall short by an estimated 10 GW. [cite web |url= |title=China's Guangdong faces severe power shortage |accessdate=2008-03-08 |format= |work=Reuters ]

ocial and economic effects

The macroeconomic implications of a supply shock-induced energy crisis are large, because energy is the resource used to exploit all other resources. When energy markets fail, an energy shortage develops. Electricity consumers may experience intentionally-engineered rolling blackouts which are released during periods of insufficient supply or unexpected power outages, regardless of the cause.

Industrialized nations are dependent on oil, and efforts to restrict the supply of oil would have an adverse effect on the economies of oil producers. For the consumer, the price of natural gas, gasoline (petrol) and diesel for cars and other vehicles rises. An early response from stakeholders is the call for reports, investigations and commissions into the price of fuels. There are also movements towards the development of more sustainable urban infrastructure.

In the market, new technology and energy efficiency measures become desirable for consumers seeking to decrease transport costs. [ [ High Oil Prices Boost Energy Efficiency] . January 30, 2008 Planet Ark.] Examples include
* In 1980 Briggs & Stratton developed the first gasoline hybrid electric automobile; also are appearing plug-in hybrids.
* modernized and electrifying passenger transport
* Railway electrification systems and new engines such as the Ganz-Mavag locomotive
* innovations like the Dahon, a folding bicycle
* variable compression ratio for vehicles
* the growth of advanced biofuels.

Other responses include the development of non-conventional oil sources such as synthetic fuel from places like the Athabasca Oil Sands, more renewable energy commercialization and use of alternative propulsion. There may be a Relocation trend towards local foods and possibly microgeneration, solar thermal collectors and other green energy sources.

Tourism trends change and ownership of gas-guzzlers vary, both because of increases to fuel costs which are passed on to customers. Items which were not so popular gain favour, such as nuclear power plants and the blanket sleeper, a garment to keep children warm. Building construction techniques change to reduce heating costs, potentially through increased insulation.

Crisis management

An electricity shortage is felt most by those who depend on electricity for their heating, cooking and water supply. In these circumstances a sustained energy crisis may become a humanitarian crisis.

If an energy shortage is prolonged a crisis management phase is enforced by authorities. Energy audits may be conducted to monitor usage. Various curfews with the intention of increasing energy conservation may be initiated to reduce consumption. To conserve power during the Central Asia energy crisis, authorities in Tajikistan ordered bars and cafes to operate by candlelight. [cite web |url= |title=Crisis Looms as Bitter Cold, Blackouts Hit Tajikistan |accessdate=2008-02-10 |format= |work=NPR ] Warnings issued that peak demand power supply might not be sustained.

In the worst kind of energy crisis energy rationing and fuel rationing may be incurred. Panic buying may beset outlets as awareness of shortages spread. Facilities close down to save on heating oil; and factories cut production and lay off workers. The risk of stagflation increases.

Mitigation of an energy crisis

The Hirsch report made clear that an energy crisis is best averted by preparation. In 2008, solutions such as the Pickens Plan and the satirical in origin Paris Hilton energy plan suggest the growing public consciousness of the importance of mitigation.

Energy policy may be reformed leading to greater energy intensity, for example in Iran with the 2007 Gas Rationing Plan in Iran, Canada and the National Energy Program and in the USA with the Energy Independence and Security Act of 2007. In Europe the oil phase-out in Sweden is an initiative a government has taken to provide energy security. Another mitigation measure is the setup of a cache of secure fuel reserves like the United States Strategic Petroleum Reserve, in case of national emergency. Chinese energy policy includes specific targets within their 5 year plans.
Andrew McKillop has been a proponent of a contract and converge model or capping scheme, to mitigate both emissions of greenhouse gases and a peak oil crisis. The imposition of a carbon tax would have mitigating effects on an oil crisis.fact|date=February 2008 The Oil Depletion Protocol has been developed by Richard Heinberg to implement a powerdown during a peak oil crisis. While many sustainable development and energy policy organisations have advocated reforms to energy development from the 1970s, some cater to a specific crisis in energy supply including Energy-Questand the International Association for Energy Economics. The Oil Depletion Analysis Centre and the Association for the Study of Peak Oil and Gas examine the timing and likely effects of peak oil.

Ecologist William Rees believes that

Due to a lack of political viability on the issue, government mandated fuel prices hikes are unlikely and the unresolved dilemma of fossil fuel dependence is becoming a wicked problem. A global soft energy path seems improbable, due to the rebound effect. Conclusions that the world is heading towards an unprecedented large and potentially devastating global energy crisis due to a decline in the availability of cheap oil lead to calls for a decreasing dependency on fossil fuel.

Other ideas have been proposed which concentrate on improved, energy-efficient design and development of urban infrastructure in developing nations. [cite web |url= |title=The Urban Component of the Energy Crisis |accessdate=2008-08-13 |author=Vittorio E. Pareto, Marcos P. Pareto |format= |work= ]

Government funding for alternative energy is more likely to increase during an energy crisis, so too are incentives for oil exploration. For example funding for research into inertial confinement fusion technology increased during 1970's.

Future and alternative energy sources

In response to the petroleum crisis, the principles of green energy and sustainable living movements gain popularity. This has led to increasing interest in alternate power/fuel research such as fuel cell technology, liquid nitrogen economy, hydrogen fuel, biomethanol, biodiesel, Karrick process, solar energy, geothermal energy, tidal energy, wave power, and wind energy, and fusion power. To date, only hydroelectricity and nuclear power have been significant alternatives to fossil fuel.

Hydrogen gas is currently produced at a net energy loss from natural gas, which is also experiencing declining production in North America and elsewhere. When not produced from natural gas, hydrogen still needs another source of energy to create it, also at a loss during the process. This has led to hydrogen being regarded as a 'carrier' of energy, like electricity, rather than a 'source'. The unproven dehydrogenating process has also been suggested for the use water as an energy source.

Efficiency mechanisms such as Negawatt power can encourage significantly more effective use of current generating capacity. It is a term used to describe the trading of increased efficiency, using consumption efficiency to increase available market supply rather than by increasing plant generation capacity. As such, it is a demand-side as opposed to a supply-side measure.


Although technology has made oil extraction more efficient, the world is having to struggle to provide oil by using increasingly costly and less productive methods such as deep sea drilling, and developing environmentally sensitive areas such as the Arctic National Wildlife Refuge.

The world's population continues to grow at a quarter of a million people per day, increasing the consumption of energy. Although far less from people in developing countries, especially USA, the per capita energy consumption of China, India and other developing nations continues to increase as the people living in these countries adopt more energy intensive lifestyles. At present a small part of the world's population consumes a large part of its resources, with the United States and its population of 300 million people consuming far more oil than China with its population of 1.3 billion people.

William Catton has emphasised the link between population size and energy supply, concluding that
David Pimentel professor of ecology and agriculture at Cornell University, has called for massive reduction in world populations in order to avoid a permanent global energy crisis. The implication is that cheap oil has created a human overshoot beyond Earth's carrying capacity which inevitably lead to an energy crisis. David Price postulates that population growth occurs when a higher quality form of energy is commercialised. [cite web |url= |title=Population and Energy |accessdate=2008-02-13 |author=David Price |format= |work= ]
Matthew Simmons and Julian Darley amongst others, have examined the economic effects of an energy crisis. Historian, and sociologist Franz Schurmann links an energy crisis with a deflating American dollar. He has stated that

According to Christopher Falvin, geopolitical factors has resulted in current energy system, based on fossil fuels, to be a risk management issue that undermines global security.fact|date=February 2008 Considering the significant source of greenhouse gas emissions accumulating in the atmosphere, fossil fuel energy is being viewed as increasingly socially irresponsible. Joseph Tainter is an expert on societal collapse and energy supply who draws attention to the complexity of modern society and our ability to problem solve the wider issue of environmental degradation. [cite web |url= |title=Complexity, Problem Solving, and Sustainable Societies |accessdate=2008-02-13 |author=Joseph A. Tainter |format= |work=Getting Down To Earth: Practical Applications of Ecological Economics |publisher=Island Press]


According to Kenneth S. Deffeyes agricultural production is heavily dependent on hydrocarbons for energy, in the form of petroleum to power machinery and transport goods to market. Another important input is fertilizer usage that is highly dependent on natural gas for its production and sometimes for fueled irrigation. Between the late 1940s and early 1980s, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%. The energy for the Green Revolution was provided almost always by fossil fuels.fact|date=February 2008 The 20th century population explosion is strongly correlated with the discovery and extraction of hydrocarbons.

The decision to develop a biofuel industry through subsidies and tariffs in the USA has increased food costs globally. Lester R. Brown states [cite web |url= |title=Ethanol craze adds to hunger pangs of world's poor |accessdate=2008-02-14 |work= ] that by converting grains into fuel for cars


Some experts including Howard Odum and David Holmgren have used the term energy descent to describe a post-peak oil period of transition. Ron Swenson has described a looming peak oil crisis as a calamity unparalleled in human history.fact|date=April 2008 The peaking of world hydrocarbon production, known as peak oil may test Malthus critics. Michael C. Ruppert has discussed energy crises in relation to the petrodollar, oil imperialism and police states.

Cultural references

Fictional scenarios have been explored in;
* Ice, online comic
* Oil Storm, movie
* The Man Who Broke Britain, a BBC docudrama
* Soylent Green
* The Running Man - depicts the effects of a global economy collapse
* Alien - depicts deep-space oil refining after Earth's supplies are exhausted.
* Mad Max - depicts an energy starved post-apocalypse world
* , depicts a global energy crisis in 2024 leading to war between Western Coalition (EU and USA) against Red Star Alliance (Russia and China) over the last remaining natural resources.

ee also

* Commodity market
* The economic influence of Energy Returned on Energy Invested
* Embodied energy
* Gasoline usage and pricing
* Peak coal
* Petroleum politics
* Resource-Based View


Further reading

* "" - examines the effect of cold war oil shortages during the Special Period.
* "Resource Wars: The New Landscape of Global Conflict" by Michael Klare
* "" by Jeremy Leggett
* "The Long Emergency" by James Howard Kunstler, explores a psychology of previous investment
* [ Eating Fossil Fuels] by Dale Allen Pfeiffer
* "The Coming Oil Crisis" by Colin Campbell
* Energy and American Society - disputes an energy crisis exists in 2007
* "The Final Energy Crisis (2nd edition)" ed by Sheila Newman (Pluto Press, London, 2008); a study of energy trends, prospects, assets and liabilities in different political systems and regions

External links

* [ 321energy]
* [ Energy bulletin]
* [ Energy shortages]
* [ The Oil Drum]

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