Energy Crisis has been making the rounds for more than a month now.
It is like the 1970s energy crisis once again, though the reasons are not the same today. But there are a few similarities. Here is what happened.
The 1970s saw America’s consumption of gasoline and other products rise despite a fall in domestic production. The imports of oil increased, so did their dependence on the OPEC nations. Americans were not worried about the falling supply or the rising prices, since policymakers assumed the oil exporters couldn’t afford to lose revenue from the US market.
The Yom Kippur Arab-Israeli war in 1973 broke the USA policymakers’ assumptions. The OPEC nations imposed sanctions on the United States and the Netherlands for helping Israel, which led to fuel shortages and sky-high crude oil prices throughout the decade. The restriction and low production continued even after the end of the War in late October 1973. Rising oil prices had a far-reaching impact on markets other than the US. Countries like Great Britain, Germany, Switzerland, Norway, and Denmark placed restrictions on driving, boating, and flying while the UK Prime Minister urged citizens to heat only one room in the winter.
The sanctions was lifted in 1974, but oil prices were still high and the effects lingered. Price controls, gasoline regulation, a national speed limit, and daylight saving were some measures the countries adopted to mitigate the effects of the energy crisis. Moreover, the countries made an effort to increase domestic oil production, reduce dependence on fossil fuels, and find other sources of power including renewable energy resources. But, as soon as the crude oil prices collapsed in the mid-80s, the per liter prices of fuel fell to moderate levels, domestic production declined, efforts for energy efficiency slowed while imports increased once again.
Well, its 2021 today and it feels like we haven’t learned our lesson yet. We are on the brink of another Energy Crisis – as supplies of natural gas, coal, and other energy sources fail to meet the rising demand post-pandemic. Let us be clear and state the energy crisis is not an illusion of our imagination; it is the truth.
With the world reeling under the fall in energy supply to meet demand every day, we thought of taking a deep dive into the reasons for the crisis, the effects, and the actions the world economies take; or should take to overcome this energy crunch.
Stay tuned for our next article in the series where we discuss what’s happening in the world.
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