Bunch of Thumb Rules for Energy Crisis - Barış Sanlı


Energy crises are very rare events. When Bilkent University first approached me for a course on energy, I said straight-ahead, "Energy Crises." We start from 19th century England and see how different crises transform the modern world during that course.


Why are crises important? They focus public interest on a particular subject and educate them. This forces, sometimes, an informed public discussion about what to do. Then the next 10-20 years are shaped by that crisis. Therefore, they are the key critical points at the energy transformations.


What makes a crisis? For finding an answer, we start from the biggest crises. In the pre-20th century period, timber crises are important. In the 20th century, the oil crises of 73-74 and 79-80 were monumental. Then there are crises named by officials like Ukraine-Russia spats. When you say unexpected, some may claim they are anticipated. But since they are rare, most of the time, we forget them. They are outliers, not the norm. Unfortunately, they happen.


The main underlying reason is my operating point stickiness theory. The energy system is huge and capital intensive. Generally, this system tries to converge to the most efficient and manageable operating point. This becomes modus operandi, and the workforce is educated this way. Strategy reports demand forecasts are all based on the usual mode of operation with a few alternative scenarios. The crises generally exceed alternative scenarios.


But when an event occurs, the workforce or the mental structure designed and worked efficiently for 20 years first thinks that it is a transitionary glitch. Then as the picture becomes clearer, everyone tries to do something. Just like everything in life, the remedy comes after some trial and error. It is probably the same across the globe.


Therefore, I will very briefly explain part of what I learned so far in those crises?

1. Crisis is a cascade event, no silver bullets for its solution: A big crisis exceeding anyone's alternative scenarios is most probably a cascade event. That is to say, and it happened because so many things went wrong. So the solution is never a one-sentence answer. Most of the time, the real answer lies in the very minute technical details.


2. Prioritize: You can not save everything in an energy crisis. In the previous oil crisis, the western world tried to save everything but was lost in political turmoil and financial stagnations. Prioritization is a key question in every crisis. What is our first three priority? Everyone will be unhappy in an energy price crisis, but only energy-poor defined by energy expenditures in household income should be saved temporarily.


3. Use maths and measure whatever possible: In constructing, what has happened forces people to come up with verifiable numbers. There is a very good book on the "Expectation Effect." People and experts may fall into the "expectation effect." "We told you so" guys are most probably wrong since they just keep saying the same narratives, whatever the crisis is. Numbers guys are critical to understanding crisis.


4. Communication is the key: If the current situation has exceeded the alternative scenario, never be optimistic. Start communicating with numbers and (without request) in regular intervals like every hour, day. The public is focused on the event, trying to build a mental model of the event. Help them by telling the scale of events.


5. Always watch weather: Generally, there should be a trigger point if there are cascade risks. In the energy sector, it is most probably weather events. Weather is the core business of security of supply. Even reserving some staff for weather events and high resolution (minute) weather station data is critical for understanding problems.


6. Learn, document, and teach: I tried to interview people with first-hand knowledge from the previous crisis in my podcasts and my writings. I checked the reports. In my Sabancı University lectures, I made the student read a report on an electricity crisis, find key points, and draw maps. Because history is a starting point for what needs to be done. Inventing the wheel again may cost you very precious time.


7. Public pressure is a negative factor: In the previous global crises, public pressure misguided most efforts and let the politicians lose time. You should be attentive to the complaints and be responsive. But, in an emergency landing of a plane, you trust the technical guy called the pilot, not the passenger, even if he sits at the business class or loud voice. Otherwise, the trouble deepens. There are various examples of public pressure interrupting the technical scenario and messing up everything—for example, Jimmy Carter's synthetic fuel policy and planting more trees to mitigate the timber crisis.


There are others, too. But the modern world is constructed on the generations and generations of accumulated knowledge. Everyone should contribute according to his experiences. That is my part for others to verify, invalidate or improve.