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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.
The crisis often has effects on the rest of the economy, with many recessions being caused by an energy crisis in some form. In particular, the production costs of electricity rise, which raises manufacturing costs.
For the consumer, the price of gasoline (petrol) and diesel for cars and other vehicles rises, leading to reduced consumer confidence and spending, higher transportation costs and general price rises.

Contents

Economy

Historical crises

Future and alternative sources of energy

See also

External links

Economy

In a market economy, the price of energy supplies such as oil, gas or electricity is driven by the principle of supply and demand which can cause sudden changes in the price of energy if either supply or demand changes. However in some cases an energy crisis is brought on by a failure of the market to adjust prices in response to shortages. In other cases, the crisis might be influenced by the lack of a free market. Some economists have argued that the 1973 energy crisis was worsened by price controls.
Oil supply is largely controlled by the national oil companies of nations with significant reserves of cheap oil, including the UAE, Saudi Arabia, Venezuela, Norway and Kuwait. Many of these countries have formed a cartel known as OPEC (Organization of Petroleum Exporting Countries). Since OPEC controls a large proportion of oil output, it exerts a strong influence on the global price of oil. When OPEC decides to reduce the output quotas of its member countries, this will tend to drive up the price of oil as the supply diminishes. Similarly, OPEC can boost oil production in order to increase supplies and drive down the price.
There are, however, limits on the actions of OPEC. If OPEC raises the price of oil too high, demand decreases and production of oil from less productive fields or unconventional sources such as tar sands becomes profitable. In addition, the economies of oil exporting nations are dependent on oil, and efforts to restrict the supply of oil would have an adverse effect on the economies of oil producers.

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.

★ Oil price increases of 2004-2006 - Cause: Near-stagnant world oil production in the face of increasing demand from the U.S and China, alongside the U.S. occupation of Iraq since March 2003. Iraq is #3 in the world (besides Saudi Arabia and Iran) for its oil reserves.

★ Argentine energy crisis (2004)

Future and alternative sources of energy

It is possible that the world is heading towards a global energy crisis due to a decline in the availability of cheap oil and recommendations to a decreasing dependency on fossil fuel. This has led to increasing interest in alternate power/fuel research such as fuel cell technology, hydrogen fuel, biomethanol, biodiesel, Karrick process, solar energy, geothermal energy, tidal energy and wind energy, and fusion power. To date, only hydroelectricity and nuclear power have been significant alternatives to fossil fuel (see Future energy development), with big ecological problems (residues and water spending). 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 rather than a 'source'.
There have been alarming predictions by groups such as the Club of Rome that the world would run out of oil (and out of food) in the late 20th century. 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. 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.
Between 1950 and 1984, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled irrigation. The 20th century population explosion is strongly correlated with the discovery and extraction of hydrocarbons. The peaking of world hydrocarbon production (Peak oil) may test Malthus critics.
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.

See also

★ Hubbert Peak Theory

★ Ehrlich-Simon bet

★ Energy conservation

★ Future energy development

★ Oil imperialism

★ Petroleum

★ Natural gas prices

★ North American natural gas crisis

★ Power outage

★ Renewable energy

★ Strategic Petroleum Reserve

★ Nuclear energy policy

★ Proposed oil phase-out in Sweden

★ Dehydrogenate to use water as an energy source.

★

★ World energy resources and consumption

★ Avoiding Dangerous Climate Change

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