This article is about energy crises in general. For other uses, see Oil crisis.
An energy crisis is any significant bottleneck in the supply of energy resources to an economy. In popular literature, it often refers to one of the energy sources used at a certain time and place, in particular those that supply national electricity grids or those used as fuel in vehicles.
Industrial development and population growth have led to a surge in the global [energy demand|demand for energy]] in recent years. In the 2000s, this new demand — together with Middle East tension, the falling value of the U.S. dollar, dwindling oil reserves, concerns over [peak oil], and oil price speculation — triggered the 2000s energy crisis, which saw the price of oil reach an all-time high of $147.30 a barrel in 2008.
Most energy crisis have been caused by localized shortages, wars and market manipulation. Some have argued that government actions like tax hikes, nationalisation of energy companies, and regulation of the energy sector, shift supply and demand of energy away from its economic equilibrium. However, the recent historical energy crisis listed below were not caused by such factors. 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, aging infrastructure, choke point disruption or bottlenecks at oil refineries and port facilities that restrict fuel supply. An emergency may emerge during very cold winters due to increased consumption of energy.
Large fluctuations and manipulations in future derivatives can have a substantial impact on price. Large investment banks control 80% of oil derivatives as of May 2012, compared to 30% only a decade ago. This increase contributed to an improvement of global energy output from 117 687 TWh in 2000 to 143 851TWh in 2008. Limitations on free trade for derivatives could reverse this trend of growth in energy production. Kuwaiti Oil Minister Hani Hussein stated that "Under the supply and demand theory, oil prices today are not justified," in an interview with Upstream.
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. Fuel shortage can also be due to the excess and useless use of the fuels.
- 2000s energy crisis - Since 2003, a rise in prices 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. At the same time the South African President was appeasing fears of a prolonged electricity crisis in South Africa."Mbeki in pledge on energy crisis". Financial Times. Retrieved 2008-02-10.
- In February 2008 the President of Pakistan announced plans to tackle energy shortages that were reaching crisis stage, despite having significant hydrocarbon reserves,. In April 2010, the Pakistani government announced the Pakistan national energy policy, which extended the official weekend and banned neon lights in response to a growing electricity shortage.
- South African electrical crisis. The South African crisis led to large price rises for platinum in February 2008 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. Supplies of electricity in Guangdong province, the manufacturing hub of China, are predicted to fall short by an estimated 10 GW. In 2011 China was forecast to have a second quarter electrical power deficit of 44.85 - 49.85 GW.
- The Economist predicted that in the years after 2009 the United Kingdom will suffer an energy crisis due to its commitments to reduce coal-fired power stations, its politicians' unwillingness to set up new nuclear power stations to replace those that will be de-commissioned, and unreliable sources and sources that are running out of oil and gas. It is therefore predicted that the UK may have regular blackouts like South Africa.
- Nepal experienced severe energy crisis in 2015 when India created an economic blockade to Nepal. Nepal faced the shortages of various kinds of petroleum products and food materials which affected severely on Nepal's economy.
- The Gaza electricity crisis is a result of the tensions between Hamas, who rules the Gaza Strip, and the Palestinian Authority/Fatah, who rules the West Bank over custom tax revenue, funding of the Gaza Strip, and political authority. Residents receive electricity for a few hours a day on a rolling blackout schedule.
Emerging oil shortage
Main articles: Oil depletion and Peak oil
“Peak oil” is the period when the maximum rate of global petroleumextraction is reached, after which the rate of production enters terminal decline. It relates to a long-term decline in the available supply of petroleum. This, combined with increasing demand, significantly increases the worldwide prices of petroleum derived products. Most significant is the availability and price of liquid fuel for transportation.
The US Department of Energy in the Hirsch report indicates that “The problems associated with world oil production peaking will not be temporary, and past 'energy crisis' experience will provide relatively little guidance.”
Main article: Mitigation of peak oil
To avoid the serious social and economic implications a global decline in oil production could entail, the 2005 Hirsch report emphasized the need to find alternatives, at least ten to twenty years before the peak, and to phase out the use of petroleum over that time. Such mitigation could include energy conservation, fuel substitution, and the use of unconventional oil. Because mitigation can reduce the use of traditional petroleum sources, it can also affect the timing of peak oil and the shape of the Hubbert curve.
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 also called the Clean Energy Act of 2007. 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. 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-Quest and 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
|“||To avoid a serious energy crisis in coming decades, citizens in the industrial countries should actually be urging their governments to come to international agreement on a persistent, orderly, predictable, and steepening series of oil and natural gas price hikes over the next two decades.||”|
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 concentrate on design and development of improved, energy-efficient urban infrastructure in developing nations. 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 the 1970s.
Kirk Sorensen and others have suggested that additional nuclear power plants, particularly liquid fluoride thorium reactors have the energy density to mitigate global warming and replace the energy from peak oil, peak coal and peak gas. The reactors produce electricity and heat so much of the transportation infrastructure should move over to electric vehicles. However, the high process heat of the molten salt reactors could be used to make liquid fuels from any carbon source.
2010s oil glut
Main article: 2010s oil glut
Rather counterintuitively, the world economy has had to deal with the unforeseen consequences of the 2015-2016 oil glut also known as 2010s oil glut, a major energy crisis that took many experts by surprise. This oversupply crisis started with a considerable time-lag, more than six years after the beginning of the Great Recession: "the price of oil [had] stabilized at a relatively high level (around $100 a barrel) unlike all previous recessionary cycles since 1980 (start of First Persian Gulf War). But nothing guarantee[d] such price levels in perpetuity".
Social and economic effects
Main articles: Energy economics and Renewable energy commercialization
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 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. January 30, 2008 Planet Ark. Examples include:
Other responses include the development of unconventional 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 and gas-guzzler ownership varies with fuel costs. Energy shortages can influence public opinion on subjects from nuclear power plants to electric blankets. Building construction techniques—improved insulation, reflective roofs, thermally efficient windows, etc.—change to reduce heating costs.
See also: Green building and Zero-energy building
An electricity shortage is felt most acutely in heating, cooking, and water supply. Therefore, 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. For example, to conserve power during the Central Asia energy crisis, authorities in Tajikistan ordered bars and cafes to operate by candlelight."Crisis Looms as Bitter Cold, Blackouts Hit Tajikistan". NPR. Retrieved 2008-02-10.
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.
Fictional scenarios have been explored in:
- ^F. William Engdahl (Mar 18, 2012). "Behind Oil Price Rise: Peak Oil or Wall Street Speculation?". Axis of Logic. Retrieved 21 March 2012.
- ^Eenergiläget in Sweden 2012 figure 49000 and 53
- ^Associated Press (12 March 2012). "Kuwait says high oil price not justified". UpStreamOnline. Retrieved 21 March 2012.
- ^"Musharraf for emergency measures to overcome energy crisis". Associated Press of Pakistan. Retrieved 2008-02-10. [dead link]
- ^"Pakistan's PM announces energy policy to tackle crisis". BBC. April 22, 2010. Retrieved 22 April 2010.
- ^"Energy crisis upsets platinum market". Nature. Retrieved 2008-02-21.
- ^"Coal shortage has China living on the edge". Archived from the original on 2009-01-16. Retrieved 2008-03-08.
- ^"China's Guangdong faces severe power shortage". Reuters. 2008-03-06. Retrieved 2008-03-08.
- ^"TABLE-China power shortage forecasts by region". Reuters. 2011-06-02. Retrieved 2011-06-12.
- ^"How long till the lights go out?". The Economist. 6 August 2009. Retrieved 31 August 2009.
- ^Israel cannot shirk its responsibility for Gaza’s electricity crisis, B'Tselem, 16 Jan 2017
- ^Palestinian Authority halts payments for Israeli electricity to Gaza: Israel, Reuters, 27th April 2017
- ^Gaza’s electricity crisis sheds light on gap between social classes, al-Monitor, March 2016
- ^The humanitarian impact of Gaza’s electricity and fuel crisis, UN OCHA, March 2014
- ^DOE Hirsch Report
- ^Vittorio E. Pareto, Marcos P. Pareto. "The Urban Component of the Energy Crisis". SSRN 1221622.
- ^"Super Fuel: Thorium, The Green Energy Source For The Future", Macmillan, (c) 2012.
- ^Firzli, M. Nicolas J. (6 April 2014). "A GCC House Divided: Country Risk Implications of the Saudi-Qatari Rift". Al-Hayat. London. Retrieved 29 December 2014.
- ^Bloomberg New Energy Finance, UNEP SEFI, Frankfurt School, Global Trends in Renewable Energy Investment 2011Archived 2013-01-13 at Archive.is
- ^Bergin, Tom (January 30, 2008). "High Oil Prices Boost Energy Efficiency - Report". www.planetark.org. Retrieved 2015-10-26.
- Ammann, Daniel (2009). The King of Oil: The Secret Lives of Marc Rich. New York: St. Martin's Press. ISBN 0-312-57074-0.
- The Power of Community: How Cuba Survived Peak Oil - examines the effect of cold war oil shortages during the Special Period.
- Resource Wars: The New Landscape of Global Conflict by Michael Klare
- Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis 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
- The End of Oil by Paul Roberts
- Sustainable energy - Without the Hot Air, David J.C. MacKay, 384 pages, UIT Cambridge (2009) ISBN 978-0954452933
- 2081: A Hopeful View of the Human Future, Gerard K. O'Neill, 284 pages, Simon & Schuster (1981) ISBN 978-0671242572
- The Nuclear Imperative: A Critical Look at the Approaching Energy Crisis (More Physics for Presidents), Jeff Eerkens, 212 pages, Springer (2010) ISBN 978-9048186662
- Rocks, Lawrence; Runyon, Richard P (1972). The Energy Crisis. Crown Publishers. ISBN 0-517-501643.
- Rocks, Lawrence; Runyon, Richard P (1972). The Energy Crisis (paperback ed.). Crown Publishers. ISBN 0-517-501651.
By: Irshad Ali Sodhar (FSP)
2. What is energy crisis?
3. Share of energy resources in energy supply
4. World consumption distribution
5. World production distribution
6. Causes of crises
a) Surge in demand
b) Resource nationalism – tighter supply
c) Political uncertainty
d) Lack of diversity
7. Impact of crises
8. Environmental concerns
9. Way out: Renewable energy
Man is dependent on energy, which has been the key to his rapid industrial growth and
technological development. The pace of development after industrial revolution is
unprecedented. Just 200 years ago, the world experienced energy revolution that launched
the industrial age. The catalyst to this epochal change was ordinary black coal – an energy
rich hydrocarbon. A century later, oil and gas were added to satiate the thirst of industry.
Man still relies mainly on these fossil fuels.
Nevertheless many other sources of energy: hydro, solar, nuclear, wind, geothermal, biogas
and wave have been taped. These sources of energy are not only renewable but clean as
well. Since the hydrocarbons are exhaustible and their use also threatens human health and
environment; this fact has necessitated transformation from non-renewable energy
resources to renewable and clean energy resources so that economic growth could be
sustained and environmental degradation could be prevented.
Energy is not only vital for the industry but it is also the life blood of our daily life. The
consumption of fossil fuels has increased manifolds due to rapid industrialisation of
developing countries like China and India. However, the major proportion of hydrocarbon is
consumed by already developed countries like the US, Japan and Western European states.
The fossil fuels are also the main source of energy for heating of houses and running motor
vehicles and generation of electricity. Since the demand has been increased far more than
the increase in the production of fossil fuels, a disproportionate imbalance between the
demand and supply has been created which has resulted in energy crisis.
If the fossil fuel production remains constant, it is estimated that the reserves will be
depleted soon. The oil crisis of 2008, when petrol prices soared to $150 a barrel, was an
early symptom of such scenario. The increasing demand coupled with speculations of
depletion of fossil fuels caused sky rocketing rise in the prices, which was the principal
catalyst behind economic crises in the world.
The energy crises are caused due to disproportionate dependence on non-renewable energy
resources fossil fuels. The hydrocarbons; coal oil and gas together constitute 85 per cent of
the world’s total energy supply. Their respective share is oil 37 per cent; coal 25 per cent
and gas 23 per cent (total 85 per cent).
On the other hand the renewable resources of energy; hydro, solar, wind, nuclear,
geothermal, biogas and wave constitute only 15 per cent of global share of energy supply.
These are also clean sources of energy. Despite their enormous benefits, the renewable
sources of energy have not been exploited sufficiently due to many reasons. The reasons
may include technological barriers, initial cost and political compulsions. Both the least
developed and developing countries mainly face technological backwardness and barriers,
while the developed countries have been too slow and reluctant to transfer their technology
due to the higher cost and political reasons.
The world distribution of energy consumption reveals that the most developed countries are
the highest consumers of fossil fuels. The US, which is the most advanced country
technologically and richest economically, consumes 25 per cent of the total world energy
output while its population makes only five per cent of the world. This makes America the
highest per capita energy consuming nation. Second comes Japan, which consumes six per
cent. The Western European countries which are also technologically advanced consume 15
per cent of the world energy. China, a growing economy, consumes nine per cent of the
world energy resources. However, the rest of the world consumes only 45 per cent of energy
This consumption is in sharp contrast to the production in respect of regional distribution. As
the US has only 2.4 per cent of world oil reserves and 3.5 per cent of gas reserves, Japan
imports 75 per cent of its energy needs, China imports more than 50 per cent of its energy
needs. The largest fossil fuel reserves are located in Middle East and Russia. The Arab
countries possess 61 per cent of oil reserves of the world but they are not big consumers.
This uneven distribution of consumption and production is the one cause of energy crisis.
Other three causes behind the global energy crisis include surge in demand, tighter supply,
political uncertainty in oil producing countries and lack of the diversity of resources. These
One, the demand of energy resources have surged throughout the world. In 1970, the total
consumption of world was 204 Quadrillion BTU which doubled in 2000 to 402 Quadrillion
BTU and is now around 500 QBTU higher. It is projected that the energy demand by 2030
will be increased by 50 per cent.
As the economy of world is mainly dependent upon fossil fuel energy, the demand of oil andgas is increasing tremendously. Let’s take example of China has more than doubled its oil
use over the past decade to 5.55 million barrel a day. The US Energy Information
Administration (EIA) has reported that China oil needs could almost double to 11 million
barrels a day by 2020. Same is the case with India, the largest growing economy in South
Asia. The Central Asian and South American countries have also multiplied their
consumption due to rapid industrialisation.
Two, the supply of oil and gas are mainly dependent upon the capacity to pump from the
reserves. Though, the Organisation of Oil Exploring Countries (OPEC) boosted the supply
during the peak crisis in 2008 but that was not enough to meet the demand of the market.
Another factor determining the oil supplies is the volatile price mechanism. As the
speculations cause increase in the prices, the oil producing countries get higher profits. This
trend has led to new political concept– Resource nationalism. The international firms have
found themselves faced with tougher terms and shut out of globe’s most promising oil
Third, the supply of hydrocarbons is also affected by the political condition in the resource
countries. Unfortunately, the political conditions in all the oil producing regions are volatile.
It was painfully felt by the western world when Arab leaders clamped an oil embargo on the
US in retaliation to Washington’s support of Israel in the 1973 Middle East war. Even today
the conditions in this region are not stable. The US forces are occupying Iraq in order to
secure oil supplies. Iran is facing sanctions due to nuclear imbroglio with the West. Russia is
also at odds with Europe on the gas supplies. Hugo Chavez is busy in consolidating power in
Venezuela where he is facing the US-backed political opposition. The Central Asian States
have their own internal political turmoil.
Fourth, nature has bestowed man with infinite resources of energy but man has made
himself dependent on the finite resources. The lack of diversity of resources is the chief
cause of energy crises. Instead of harnessing new technology, the industrial growth in
developing countries is increasingly dependent on fossil fuels.
Such importance of energy has made it important element in the foreign policies of the
independent states. The 20th century and dawn of the 21st century have seen wars fought
for oil. In 1977, CIA prepared a plan “Go to war to get oil” and subsequently, the US went to
war with Iraq in 1991Gulf war. America is again there for the same purpose.
Similarly China’s foreign policy towards many regions of the world particularly Africa, the
Middle East and Caspian Sea region, oil holds a critical status. China’s vibrant policies in
these regions are being watchfully monitored by Washington. This is also true for South
Asian region. Pakistan is engaged with Iran for gas pipeline project and is equally interested
in the Caspian Sea region – Central Asian States.
Besides these conflicts, the fossil fuels cause havoc to our environment. The hydrocarbons
are the chief source of green house gases-carbon dioxide, Methane, fluorine, which cause
global warning. Burning coal accounts for 43 per cent of carbon emissions. Oil and gas
account for another 40 per cent of emissions of CO2.
Fears of global warning aside, burning fossil fuel releases chemicals and particulates that
cause cancer, brain and nerve damage, birth defects, lung injury, and breathing problems.
The toxics released by combusting hydrocarbons pollute the air and water and causes acid
rain and smog. These negative implications of burning fossil fuels on human environment
and life make it incumbent upon man to diversify the energy resources.
Man also needs to realise that the fossil fuel energy is limited and would be depleted.
Hennery Kissinger had said, “The amount of energy is finite ………. And competition for
access to energy can become the life and death for many societies”.
First; the solar energy, the basic source of energy, can be converged and converted into
different ways, such as simple water heating for domestic use or by the direct conversion of
sunlight to electrical energy using mirrors, boilers or photovoltaic cells. Currently only 0.5
per cent of the world energy supply is obtained from this source.
Second; humans have been harnessing the wind for thousands of years and have succeeded
in producing electricity from it. Air flowing through turbines or spinning blades generates
power that can be used to pump water or generate electricity. At present, the wind energy
constitutes 0.3 per cent of world energy supply but it has a great potential. Germany is
producing 23000 MW from wind, which is more than Pakistan’s total installed electricity
generation capacity. Like solar energy it is also a clean source of energy. According to the
US Department of Energy the world’s winds could supply more than 15 times its current
Third; hydroelectric power is another source of renewable energy in the natural water cycle.
The flow of streams can be manipulated by construction of dams at higher altitudes and the
kinetic energy of waterfall is used to rotate the turbines to make electricity. This is the very
cheaper source and clean form of energy.
Fourth; atomic energy is hailed as panacea to pollution problems generated by fossil fuels,
and is destined to be the cheapest source of energy. However, it is also limited and has
hazardous effects on human health. But given the potential of energy and the capacity of
technology to safeguard the nuclear plants, it is the quickest option to solve the energy
crises in the world as one nuclear pellet (finger) produces energy equivalent to 17000 cubic
feet of natural gas.
Fifth; biomass is also a potential source of energy. Humans have been burning biomass
materials since the dawn of time. It has been recently discovered to produce clean
combustible gas from waste products such as sewerage and crop residue. Many countries
have also invested in bio-fuels. However, this is counter-productive as it induced rise in food
prices, therefore only bio waste should be used for energy production.
Sixth; another alternate source of oil is methanol – a clear colourless liquid made from
natural gas, coal industrial garbage. This is a reliable source of fuel for automobiles as it is
cheaper and far easier to be produced in bulk.
Seventh; geothermal energy can be used with heat pumps to warm a buildings or swimming
pools in winter. This can lessen the need for other power to maintain comfortable
temperatures in buildings, particularly in countries having very cold winters.
Eighth; hydrogen has been touted as the fuel of the future. It is most abundant element
known in the universe and can be burnt as a fuel for vehicles and industry. If this form of
energy is taped at a larger scale, it will eventually become society’s primary energy carrier
in the 21st century.
The media and industry claim that renewable energies are not yet economically competitive
fossil fuels. Perhaps not; but given the health and environmental costs, and limit of fossil
fuels, the price of renewable energy is only viable option. However, no renewable energy
form will single handedly replace oil, but together they will become a very important part of
the energy mix of the future.
As the demand of energy is set to grow rapidly during next 20 years the supply of energy is
going to decline, which could give rise to competition and conflict coupled with economic
instability. Meanwhile, human environmental and health hazards could become
irrecoverable. Therefore, man should strive for energy independence that can be achieved
only through fuel choice and competition. And the first choice of sustainable energy is the
clean and renewable energy.
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