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Was 2021 Just the Beginning of an Energy Crisis? - Barış Sanlı

Crises do not have specialization, because each crisis is a different kind of monster. For this reason, analysis of what was done right or wrong in past crises is more important than crisis expertise. Studying the past provides a toolkit. For this reason, it would be useful to keep the past events and results in the knowledge base.

The ancestor of all energy crises is the 1973-74 and 1979-80 oil crises. It may be necessary to look at these crises for two reasons. Many experts know very well the establishment of the IEA (International Energy Agency) against the Organization of Petroleum Exporting Countries (OPEC) in the first oil crisis. But EIA (Energy Information Administration), whose name is confused with IEA, dates back to 1974's . With the Federal Energy Management Act, the tasks of “collecting, evaluating, analyzing, future reflections” of energy information were determined, and then the Office of Energy Information and Analysis was established in 1976, and then its name was determined as EIA.

Today, the EIA is still the most important single point source of US energy data. So, when we think of a crisis, when we think of the lack of a resource or the high price, how was it that a "statistics institution" was established? Because the inability to increase oil production in the USA during the oil crisis brought along the arguments that there were errors in the statistics given by the producers and that this caught the USA unprepared.

In times of crisis, data becomes even more important. Because, in the simplest terms, "if you can't measure, you can't manage". Therefore, it would not be wrong to say that in 2022 and beyond, we will enter a period in which data is spoken more and gains more importance.

So what should we do in crises? The people, the politicians, the technocrats, the markets? People want the price of everything to drop, politicians want to look good for the next election, technocrats want to put into action the plans they already had in their minds before the crisis, and the markets want to make a profit. To make everyone happy, “removing taxes, saying it's not in the hands of politicians, opening and accelerating a necessary season of unnecessary regulation, and keeping prices running pretty high” seems like a paradoxical sufficient condition. Thus, the consumer does not have to cut back on consumption, the politician does not lose votes, the technocrats strengthen their strongholds and the markets provide a rapid return on their investments.

It is useful to look at this situation in the 1979-80 period. Perhaps it is also useful to remember who came at the end of the USA's worst energy crisis in 1981: Ronald Reagan. The previous president, Jimmy Carter, is also in trouble with the Iran hostage crisis. But even though Carter prioritized alternative energy systems enough to be innovative enough to put solar panels (water heating) on ​​the roof of the White House and to invest in synthetic fuels, the result was anti-regulation Ronald Reagan, who said let's look for more oil.

In the recent period, the players of the system have been the opposite of optimization. The most obvious reason for this is people's action-discourse distinction. Whether we accept it or not, it is like a universal law. This distinction between action and discourse is the difference between what people say and what they do. Everyone complains about paying taxes, but no one makes taxes the subject of a referendum. Everyone is an environmentalist, but consumption of red meat, energy, goods and services continues at full speed.

It has been discussed for a long time that the end of oil has come to an end in the last 2008 crisis. Again, it was always on the agenda that this world would not be enough and the resources would run out. One of the most distinctive features of this was the increase in documentaries and groups "preparing for the apocalypse".

According to BP Energy statistics, world energy consumption is 13% higher in 2020 compared to 2008. The climb of oil, natural gas and coal accelerated. The period when the search for a sustainable world was at its peak also marked the beginning of a new fossil era.

But not everything is so sinful and hypocritical. PURPA law in the USA in the 1970s also became a kind of ancestor of renewable purchase guarantees. Years later, PURPA was also cited in renewable energy support mechanisms in Germany. The way for people to produce their own energies has been opened. This also led to the rise of cogeneration, that is, simultaneous heat-electricity generation technologies and natural gas. In the 2008 crisis, electric car companies such as Tesla also marked the beginning of periods such as automation and scaling in solar panel production.

In short, while the crisis had the opposite effect of what was expected in the near term, it also brought some of the expected effect in the medium-long term.

We should be surprised if we see more fossil fuel consumption in the exit from this crisis. For this reason, it is necessary to read the energy crises and the later ones from the data by closing their ears to the discourses.

I wonder if people are more inclined to form common wisdom or madness when they come together? If we look at the past examples here; In times of crisis, human societies lose their way, they cannot find the truth or the truth, what needs to be done. Both politicians and the public are actually deepening the crisis, just as US President Carter's treatment of synthetic fuels and people seeing their states as the only culprit in the 1973-74 crisis stemming from the Middle East. They destabilize the system even more. Because due to urgency, everyone wants results as soon as possible and there is no time. Maybe it would be right to examine the political transformation in the USA and Italy with the vote preferences of the people after the 2008 financial crisis.

This energy crisis will be no different. In general, resolving crises in the shortest way, fixing prices or supporting the consumer has not increased the vote rate in any of the countries I have studied. Because people see support as a right, hence, their effect is zero. But since the crisis continues in one way or another, the "state" is always responsible. One of the interesting examples of this is now given by England. 21 companies in the UK went bankrupt, but the UK did not provide additional consumer support despite high prices. Although the Macron administration sent inflation checks in France, the rate of those who did not approve the policies is 57% and this rate has been at the same level for the last year. Of course, Covid policies and economy are much more effective in these surveys. However, it can be claimed that energy supplements did not have a significant effect.

This is a very interesting dilemma. While the public complains at the price level, they punish the politician even if they get support. Because whatever the politician does, he is the chief responsible for this crisis. In other words, whatever the current governments do in this energy crisis, their job is difficult. In the European financial crisis, as in the case of Italy, it would not be surprising for the large masses who said "it would be better if a comedian came".

So why? Crises take us all out of our comfort zone. Energy crises are also dragging us into an area we do not know. Since we do not question the past too much, we do not hesitate to make the same mistakes over and over again. For this reason, even with energy, crises are prolonged. While the volume of complaints from crises increases, none of us actually know what to do. Just as the world was blatantly dragged into an energy crisis from 2005 to 2008, we are still going to that conclusion even though we are blatantly complaining.

In fact, we have energy efficiency as a very clear tool. But it's more tempting to criticize the inefficiencies of others than to make ourselves productive. Maybe we feel like we did the right thing when we criticize, so we don't have to do it right. As we have seen in the past global examples, almost no consumer in the world takes action without feeling the crisis. In the USA, people change their vehicle preferences after waiting in long lines in gas lines, and the regulation also has an effect here. In the last Texas energy crisis, it can be said that although consumers were in crisis and knew the prices, they still could not prevent $5000/week bills. But after that, an awareness began. According to some studies, their effects may not be long-term. After the 2008 energy crisis, we really saw efficiency in many electric consumption vehicles. Unfortunately, none of them was due to the interest of the consumer, but it was an efficiency enforced by the regulations. This time, we should not expect it to be different.

So, does the world really drift from one end to the other like it did in the 1970s, 80s, and 2008s? It will most likely bounce again. In 1972, “Limits to Growth”, the discussion that the resources will not be enough with a modeling at MIT comes back as “degrowth” today. The limitation of fossil resources in the 1980s is always on the agenda. We cannot claim that we have gone too far from the discussions of the 2008s. Even the production of fuel from non-food agricultural products promised at that time was not discussed at all. Ethanol production from corn in the USA during the drought period increased from 3.71 billion bushels (8 gallons = 36.4 liters) in 2008 to 5 billion bushels in 2020 .

But this energy crisis will trigger innovation even more. It's unlikely that this innovation - if we look at past patterns - will come from the sun or from electric car batteries. The innovation here has perhaps reached its limits (also with solid-state batteries), and it may need 10-odd years to take the next step. Hydrogen and fusion is on the agenda in every period. There is little chance that new innovation can come from here. But innovation can be expected on the gas, nuclear side. Further electronicization can also be expected in the way we generate and use energy. Another interesting point is that data and human behavior will become more prominent, and the importance of behavioral approaches in energy policies will be a result of digitalization. While the acceleration of innovation in materials and production with artificial intelligence is inevitable, its effects are even more uncertain.

The future will of course be different, every crisis is different. The results and effects will be different. But only by making notes to ourselves and to each other can we better understand and analyze crises and learn from each other and from our past reflections. Whether we like it or not, unfortunately, we draw the best lessons from our mistakes. We should not be afraid of it.


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