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| Fri, 3rd Jun 2022 8:01:00 |
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The world may be careening toward a 1970s-style energy crisis -- or worse |
The world is grappling with gravity-defying energy price spikes on everything from gasoline and natural gas to coal. Some fear this may just be the beginning.
Current and former energy officials tell CNN they worry that Russia's invasion of Ukraine in the wake of years of underinvestment in the energy sector have sent the world careening into a crisis that will rival or even exceed the oil crises of the 1970s and early 1980s.
Unlike those infamous episodes, this one is not contained to oil.
"Now we have an oil crisis, a gas crisis and an electricity crisis at the same time," Fatih Birol, head of the International Energy Agency watchdog group, told Der Spiegel in an interview published this week. "This energy crisis is much bigger than the oil crises of the 1970s and 1980s. And it will probably last longer."
The global economy has largely been able to withstand surging energy prices so far. But prices could continue to rise to unsustainable levels as Europe attempts to wean itself off Russian oil and, potentially, gas. Supply shortages could lead to some difficult choices in Europe, including rationing.
Joe McMonigle, secretary general of the International Energy Forum, said he agrees with this depressing forecast from the IEA.
"We have a serious problem around the world that I think policymakers are just waking up to. It's kind of a perfect storm," McMonigle, whose group serves as a go-between for energy producing and consuming nations, told CNN in a phone interview.
The extent of that perfect storm -- underinvestment, strong demand and supply disruptions from the war -- will have wide-reaching consequences, potentially threatening the economic recovery from Covid-19, exacerbating inflation, fueling social unrest and undermining efforts to save the planet from global warming.
Birol warned of supply bottlenecks of gasoline and diesel, especially in Europe, as well as rationing of natural gas next winter in Europe.
"It is a crisis for which the world is woefully unprepared," said Robert McNally, who served as a top energy adviser to former US President George W. Bush.
Not only are energy prices very high, but the reliability of the power grid is being challenged by extreme temperatures and severe drought. A US power grid regulator warned last month that parts of the country could face electricity shortages and even blackouts this summer.´
Former Obama energy adviser Jason Bordoff and Harvard University professor Meghan O'Sullivan wrote a piece in the Economist in late March warning that the world was on the cusp of "what may become the worst energy crisis since the 1970s."
"Since we wrote that, our fears have borne out," Bordoff, co-founding dean of the Columbia Climate School, told CNN.
Of course, there are key differences between today and the 1970s. Prices have not spiked nearly as much as they did then and policymakers have not resorted to extreme steps like price controls.
"Were we to resort to price controls and price caps, then we could have shortages," McNally said.
When the war started, the West sought to avoid targeting Russia's energy supplies directly because it was simply too critical to global markets. Russia is not just the world's largest oil exporter, but it is the biggest natural gas exporter and a major supplier of coal.
(...)
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