Energy Crisis (Economic Geography) – UPSC

In this article, You will read Energy Crisis (Economic Geography) – for UPSC.

Energy Crisis

• The energy crisis is the concern that the world’s demands on the limited natural resources that are used to power industrial society are diminishing as the demand rises. These natural resources are in limited supply. While they do occur naturally, it can take hundreds of thousands of years to replenish the stores.
• Energy crisis can be brought by many factors: organized labour strikes, embargoes by governments, over-consumption, aging infrastructure, and bottlenecks at production centers and port facilities.
• 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 on important infrastructure are a possible problem for energy consumers: a successful strike on a West Asian facility could potentially cause global shortages. Political events-change of governments due to regime change, monarchy collapse, military occupation or a coup-may disrupt oil and gas production and create shortages.
• The world over the economy has come to be heavily dependent on oil consumption. Even a slight change in prices, or temporary stoppage of production or supply of oil, can cause major upheavals in the economy.
• In October 1973, the Organization of Petroleum Exporting Countries (OPEC) raised the prices of oil from $ 1.5 per barrel to $7 per barrel. The reasons given were that oil prices were not in tune with the increase in prices of other commodities and that the countries wanted to make maximum profits while the limited reserves lasted. In 1979, the Iranian revolution caused a disruption in oil supplies.
• The price in dollars per barrel shot up to 24 in 1979, 34 in 1981 before stabilizing at around 20. Because of the hike, economies were hit worldwide. The worst sufferers were the developing countries that did not have ensuing foreign exchange reserves to pay for oil imports. In the ensuing economic crisis, there were demands for higher wages, and the cost of living went up.
• Once again in 1990, there was a price hike in oil as well as difficulty in meeting demand because of the Gulf war.
• The 1973 and 1979 crises forced the world community to improve oil-using technology, develop alternative sources and develop indigenous potential (as in India). Vigorous efforts were made worldwide to improve the internal combustion engine for better efficiency and mileage.
• Since 2003, the price of oil has gone up because of the continued global increase in demand coupled with stagnation in production.
• In 2008, the Central Asia energy crisis was caused by abnormally cold temperatures and low water levels in an area dependent on hydroelectric power. Despite having significant hydrocarbon reserves, in February 2008, the President of Pakistan announced plans to tackle energy shortages that were reaching the crisis stage. At the same the South in South Africa. The South African crisis, which may last to 2012, led to a large price rise for platinum in February 2008 and reduced gold production.
• China experienced severe energy shortages towards the end of 2005 and again in early 2008. During the latter crisis, it suffered severe damage to power networks along with diesel and coal shortages.
• It has been predicted in the coming 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 decommissioned in a few years (even though they will not be running in time to stop a full-blown crisis) and unreliable sources and sources that are running out of oil and gas.
• 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. Ultimately, demands over stripping supply and environmental impact are likely to be the major factors in an energy crisis.
• The reserves of coal, oil, gas is limited, besides these being agents of global warming. Hydroelectricity is capital-intensive and environmentally sensitive. Nuclear energy is expensive and potentially hazardous, while over-exploitation of wood and animal wastes leads to environmental degradation and ecological imbalance. Steps need to be taken so that the world may avert an energy crisis of disastrous dimensions.
• Energy policies need to be formulated or reformed to meet the needs of energy security.
• Energy security refers to continuous energy availability for the economy always at prices that can be compared to what the countries of the world pay for energy.
• There are multiple means to ensure energy security. One way is that of storing fuels in large quantities so that supply disruption for some time would not produce a tremendous effect. Large economies, therefore, build strategic reserves of oil and gas. India, too, has begun doing so [Mangalore, Visakhapatnam, and Padur (Udupi, Karnataka)].
• However, storing vast amounts of fuel is very expensive. It requires huge storage facilities. It also means a large capital would be blocked for maintaining the large inventories for a long time.
• The cost for this will be passed on to the economy. People will be affected by the high price rise in fuels even if oil companies are asked to maintain strategic reserves as they will pass on the increase in their operating costs to the people. If the government itself funds the reserves entirely, it will raise taxes, or borrow, which means a higher tax or interest burden.
• Energy security can be improved by other methods. Diversifying the kinds of fuels used is one way, especially as supply disruptions cannot happen in all fuels and in every country supplying energy at the same time. Even the energy supply sources in geographical terms need to be diversified. The modes of fuel transport can be expanded.
• For instance, gas can come through liquefied natural gas carried by ships. But one of the best means concerns demands side management to develop energy efficiency and bring down energy demand. Japan did something similar after the oil shocks of the 1970s when it brought in gains in energy efficiency in its economy in which increases the cost of energy played an important part.
• In Europe, the oil phase-out in Sweden is an initiative the government has taken to provide energy security.
• Another mitigation measure is the setting up of a cache of secure fuel reserves like the United States Strategic Petroleum Reserve in case of a national emergency. Chinese energy policy includes specific targets within their five-year plans.
• 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 have led to calls for a decreasing dependency on fossil fuel. Other ideas have been proposed which concentrate on improved, energy-efficient design and development of urban infrastructure in developing nations.
• In response to the petroleum crisis, the principles of green energy and sustainable living movements gain popularity.
• Efficiency mechanisms such as ‘megawatt power’ can encourage significantly more effective use of current generating capacity. Negawatt power 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.

Steps to overcome the crisis

• Discourage oil-intensive activities.
• Replace oil with alcohol-based fuels from sugarcane and other crops.
• Develop more efficient techniques for the liquefaction of coal so that it can be transported over long distances at lower costs.
• Prevent fires and roof collapse accidents in coal mines.
• Develop safer, cheaper technology for nuclear, solar, wind, wave, tidal, and geothermal energy.
• Get developed nations to provide funds and technology to natural resource-rich developing nations to utilize energy sources efficiently.
• David Pimentel, professor of ecology and agriculture at Cornell University, has called for the massive reduction in world populations to avoid a permanent global energy crisis. The implication is that cheap oil has created a human overshoot beyond earth’s carrying capacity which will inevitably lead to an energy crisis.
• So, a sustainable balance must be maintained between economic development and population growth.