What Is Energy Crunch?

This situation is variously called an energy crunch, an energy crisis or even a shortage (of whatever fuel is supposedly in short supply). But the dictionary/encyclopedia definition states that a crisis/crunch can be a bottleneck that slows the production and/or transportation of a resource. This crisis or crunch can also be due to a disturbing increase in the price of that fuel/resource.

The terms are usually applied to the oil supply, or at least they have been in recent months and years. There have been times when the supply of other power and energy resources is low, causing a rise in price or a demand that cannot be met. One of the major causes of a crunch in the energy market is the intentional manipulation of the supply and the price. There are speculators (sometimes called investors) who control or attempt to control oil resources and transportation, for instance, so that they can benefit from a price change.

This may be due to legitimate reasons, such as a work stoppage by laborers or transporters. It could also occur when one government restricts or stops imports or exports of an energy resource. The decreased supply leads to a more expensive commodity. The crisis or crunch hits the “man or woman on the street” when the supply is so low he or she cannot get access to the energy resource at any cost. If there is a serious disruption in production due to equipment breakdown at the processing plant or refinery, an energy crunch may certainly occur.

Several times in the past, political, military and social situations in various oil-producing countries have slowed or disrupted the supply of the energy resource. A military or “terrorist” strike on a production facility in a producing country can quickly cause a shortage of oil-based fuels around the globe.

History has shown that prices rose dramatically in 1973 when the Organization of Petroleum Exporting Countries (OPEC) stopped the production and transportation of oil (embargo) when “western” countries backed Israel in a military conflict. The 1990 increase in oil price was due to the military conflict known as the Gulf War. A similar crisis or crunch can occur when corruption and lack of oversight in an industry lead to a breakdown in production.

Some fuel and energy watchers warn of a coming major crisis when huge oil field reserves are depleted. The consumer demand for gasoline continues to increase and leads some speculators to try to control the market, in order to profit before the supply slows considerably. When the majority of a population is sufficiently shocked or excited about an impending fuel shortage, there may be temporary, increased demand. This could actually produce a shortage, however short-lived it is.
Prices generally will rise during this period and the proverbial energy crunch or crisis, once only feared, becomes a reality.

In the past two or three decades, one of the responses to a reported energy crisis or shortage has been to turn the focus onto alternative fuels and alternative sources for energy. Wind, vegetable products and other ideas have been pursued in recent years.

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