What are the differences in the origins and development of the currently developing 2022 energy crisis compared to the energy crisis of the 1970s?
Increase in the price of fossil fuels (in the 1970s mainly oil). Rising inflation, rising interest rates, economic crisis, economic recession, rising unemployment. Creation of new technological solutions, energy innovations, which can significantly reduce the level of consumption of energy raw materials in power generation, the level of fuel combustion in motor vehicle engines, etc. So looking at the energy crisis of the 1970s and the current energy crisis, you can see many parallels. And what were the key differences apart from the fact that in the 1970s the accelerating process of global warming was not yet noticed, the onset of the climate crisis was overlooked or deliberately ignored.
In view of the above, I address the following question to the esteemed community of researchers and scientists:
What are the differences in the genesis and development of the currently developing 2022 energy crisis compared to the energy crisis of the 1970s?
What is your opinion on this subject?
Please reply,
I invite you all to discuss,
Thank you very much,
Regards,
Dariusz Prokopowicz
I think that in 1974 the reason for energy crisis (that time resulting only in substantial rise of oil price) was grounded on the decision of OPEC cartel to influence price by limiting supply. Another reason was the belief in oil scarcity, based on peak oil in the USA in 1970s. Markets that time were functioning without frictions. In 2022 we see a lot of deviations from normal market functioning, coming from multiple sanctions, first on Iran and Venezuela and later on Russia. OPEC agreement still plays role, but it is marginal, as we could see from the history of evolution of oil prices in the last decade. Nowadays the energy crisis started first in summer 2021, with skyrocketing prices for natural gas accompanied with electricity price rise in many EU countries. This happened before the war in Ukraine, and we cannot explain this event by sanctions or destruction of pipelines. But it will be more severe in winter 2022-23 comparing with 2021 as more mechanisms are working now towards limits for trade in hydrocarbons.
One has to consider the sudden decrease in production and exploration in both the oil and gas sector in the US 2020 following the US election. At the end of the first quarter in 2020 the oil production was about 13 mmbpd. By mid year US production was less than 11 mmbpd. A slow recovery has been experienced since then, but even now in third quarter 2022 we are at 11.9 mmbpd. The gas sector experienced a similar drop in production resulting in the rapid rise in natural gas prices. The repeated tapping into the Strategic Oil Reserve is analgous to offering someone a single squares of toilet paper when the roll is empty in their stall. The price of world oil will remain high until the missing 2 mmbpd is replaced on a permanent basis. This is all unfortunate and unnecessary and will remain so as long as the US and European oil and gas sectors are politically manipulated. OPEC and the Saudis cannot be faulted when they react in a self- favorible business manner to the world market. It's not personal, it's business. There may be a silver lining to the current oil and gas market movements. Oil and gas left in the ground, for whatever reason, will be available at some future point when the market price and political climate are right and would result in considerable positive cash flow for the US economy. Simply put, the world O & G system is complicated and constantly manipulated by non-market forces resulting in wide price swings.
The current crisis differs from previous such episodes in several important respects, mainly because the recent surge in energy prices offers a glimpse of a future, where a transition to a low-carbon economy that is not properly managed or stress-tested against scarcity and volatility might produce recurrent market crunches and hinder any decarbonisation trajectory. Disruption to energy markets might become a regular phenomenon in the years and decades ahead, fuelled by the impact of rising temperatures on ecosystems and climatic patterns, and by siloed policies and poorly managed decarbonisation processes.
The electrification of the economy is necessary to drive the transition to clean energy sources, yet paradoxically this will make the system less resilient if the intermittency challenge is not resolved; consequently, this will not be the last crisis in the brave new world of clean energy.
The emerging scenario will lead to rolling blackouts, increasing societal stratification and inequalities, but also to much lost economic output. In the global competition for dwindling fossil fuel resources, smaller and poorer states will not be able to compete, amplifying global inequalities as well.
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The salient fact about the decades ahead is that we are entering a permanent global energy crisis and it will change everything about how we live.
James Howard Kunstler
The current crises (economic) is caused mainly by political/geopolitical (local, regional and international conflicts) crisis. I would say it has to some extent “artificial“ nature. That’s why it’s so hard to predict how it might develop.