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.

Causes

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. At the same time the South African President was appeasing fears of a prolonged electricity crisis in South Africa.

- South African electrical crisis. The South African crisis, which may last to 2012, lead 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.

Social 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. 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. 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.