Student Essays On The Energy Crisis Of 2007

Energy Crisis´ Impact on the Economy

Did you know that the world consumes 40,000 gallons of oil per second? Because of that, oil production has reached its peak in 33 out of 48 countries.1 Today oil is a very important part of everyday life. For example, in the USA, the transportation sector is almost exclusively moved by energy made from oil.2 Oil is also the reason why we have the possibility to get bananas or melons in winter. Cargo ships make it happen that we can enjoy fruits or vegetables at any time of the year, when it is usually not possible to get these in our region. The big problem is that we run out of oil and gas. Experts say that oil will be finished in approximately 2050 and gas in about 2070. These facts have massive effects on oil prices. Oil and gas prices will increase sharply over the next few decades. The same applies to a lot of other items, which need oil for their production or their transportation. As a result everyone´s life will be influenced and will become more expensive.3 Today there are many alternatives to oil or gas. Renewable energies could replace them. This is the chance that our dependency on oil or gas will become reduced in the future. Therefore it is very important that the development of the renewable energies gets support and that it will evolve.4 All in all, the energy crisis has three main impacts on the economy, such as the increase of oil prices, financial downturns and it offers the opportunity to develop renewable energies.

Oil reserves are decreasing, which has the effect that the oil prices rise steadily. Currently, the world consumes 85 million barrels of oil per day in manufacturing and transport. For instance, 97 percent of the transportation sector (such as cars, subways, buses, railroads, ships and airplanes) in the USA is moved by energy made from oil.5 And demand for the black gold keeps rising. Oil underpins the global economy. This means that our everyday life will get more expensive and most of us have to learn to do without. And this would be the first step to get away from the addiction to oil.6 Because the production of some items will cost more and so the consumer has to pay more for the end product. Also food gets more expensive, especially this kind of food, which has to be transported from far away by trucks, cargo ships or airplanes.7 Therefore oil gives us mobility, but it also heats and cools our homes and it manage to create electricity. A lot of products, which are needed daily, are made from oil, such as plastics, clothing, life-saving medications, cosmetics, etc.8 The oil crisis will have significant effects on a lot of jobs which rely on oil. Nearly every job relies on oil even if some directly rely on oil and some indirectly. For that reason a lot of people will lose their jobs especially in some certain industries. However there are also other examples, like the automobile industry. This sector will experience many renewals. In the foreseeable future they have to change their usual style to manufacture cars. Thereby jobs such as gas station operator or car mechanic will change drastically.9 Ron Swenson is the publisher and editor of “The Coming Global Energy Crisis” website. Among others he said that at first it will become hard for people, who have only oil heating in their house or apartment. They have no other possibility than to pay the charged price for heating. Unless they could find an alternative to oil heating. Otherwise they are victims of their oil dependence. In addition the decreasing oil reserves will have a negative impact on oil prices.10

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1 Kuhlman (2007)

2 SPE (2008a)

3 SPE (2008b)

4 Alliant (2007)

5 SPE (2008a)

6 Kirby (2004)

7 Joseph (2004b)

8 SPE (2008a)

9 SPE (2008c)

10 Swenson (2008a)

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.

Causes[edit]

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.[1] This increase contributed to an improvement of global energy output from 117 687 TWh in 2000 to 143 851TWh in 2008.[2] 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.[3]

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.

Historical crises[edit]

  • 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,.[4] 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.[5]
  • South African electrical crisis. The South African crisis led to large price rises for platinum in February 2008 and reduced gold production.[6]
  • 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.[7] Supplies of electricity in Guangdong province, the manufacturing hub of China, are predicted to fall short by an estimated 10 GW.[8] In 2011 China was forecast to have a second quarter electrical power deficit of 44.85 - 49.85 GW.[9]
  • 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.[10]
  • 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.[11][12][13][14]

Emerging oil shortage[edit]

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.[citation needed]

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.”[15]

Mitigation efforts[edit]

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.[citation needed] 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.[16] 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[17] 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[edit]

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".[18]

Social and economic effects[edit]

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.[20] 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

Crisis management[edit]

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.

Cultural references[edit]

Fictional scenarios have been explored in:

See also[edit]

References[edit]

  1. ^F. William Engdahl (Mar 18, 2012). "Behind Oil Price Rise: Peak Oil or Wall Street Speculation?". Axis of Logic. Retrieved 21 March 2012. 
  2. ^Eenergiläget in Sweden 2012 figure 49000 and 53
  3. ^Associated Press (12 March 2012). "Kuwait says high oil price not justified". UpStreamOnline. Retrieved 21 March 2012. 
  4. ^"Musharraf for emergency measures to overcome energy crisis". Associated Press of Pakistan. Retrieved 2008-02-10. [dead link]
  5. ^"Pakistan's PM announces energy policy to tackle crisis". BBC. April 22, 2010. Retrieved 22 April 2010. 
  6. ^"Energy crisis upsets platinum market". Nature. Retrieved 2008-02-21. 
  7. ^"Coal shortage has China living on the edge". Archived from the original on 2009-01-16. Retrieved 2008-03-08. 
  8. ^"China's Guangdong faces severe power shortage". Reuters. 2008-03-06. Retrieved 2008-03-08. 
  9. ^"TABLE-China power shortage forecasts by region". Reuters. 2011-06-02. Retrieved 2011-06-12. 
  10. ^"How long till the lights go out?". The Economist. 6 August 2009. Retrieved 31 August 2009. 
  11. ^Israel cannot shirk its responsibility for Gaza’s electricity crisis, B'Tselem, 16 Jan 2017
  12. ^Palestinian Authority halts payments for Israeli electricity to Gaza: Israel, Reuters, 27th April 2017
  13. ^Gaza’s electricity crisis sheds light on gap between social classes, al-Monitor, March 2016
  14. ^The humanitarian impact of Gaza’s electricity and fuel crisis, UN OCHA, March 2014
  15. ^DOE Hirsch Report
  16. ^Vittorio E. Pareto, Marcos P. Pareto. "The Urban Component of the Energy Crisis". SSRN 1221622. 
  17. ^"Super Fuel: Thorium, The Green Energy Source For The Future", Macmillan, (c) 2012.
  18. ^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. 
  19. ^Bloomberg New Energy Finance, UNEP SEFI, Frankfurt School, Global Trends in Renewable Energy Investment 2011Archived 2013-01-13 at Archive.is
  20. ^Bergin, Tom (January 30, 2008). "High Oil Prices Boost Energy Efficiency - Report". www.planetark.org. Retrieved 2015-10-26. 

Further reading[edit]

  • 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. 

External links[edit]

The gasoline shortages of World War II brought about the resurgence of horse-and-wagon delivery.
Global New Investments in Renewable Energy[19]

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