A Sense of Deja Vu
For those of us old enough to remember the oil embargo of the early 1970s, the various flare-ups in the Middle East over the past year have a familiar ring. The reasons are a little different, but the results are the same--the flow of oil may be at risk. The oil embargo of the early 1970s resulted in long gas lines. So far, the political unrest in the Middle East and the threats and counter-threats between Iran and West have "only" resulted in unstable prices at the gas pump.
Europe is beginning to feel its vulnerability. They have a double threat--dependence on oil from the Middle East and on gas from Russia. The good news is that they have started to take some actions to protect themselves. The European Union is developing a plan to put in place a joint energy market by 2014.
This isn't a done deal yet, and it won't do everything. Interconnecting the European energy supply (electricity grids and gas pipelines) will certainly help the European countries share their resources better, but it won't create new sources of energy. In the current economy, the cost of this venture is likely to be a big issue. And the role of nuclear power, as always, remains controversial. Still, if Europe is successful in getting this started, and if it is accompanied by a European initiative to build more nuclear power plants and other sources of supply that help free them from dependence on other parts of the world, then this initiative is a promising one.
What happens in Europe is not inconsequential. Collectively, the EU is the world's largest regional energy market, serving some 500 million people.
The United States and other countries may not face the same need Europe does to interconnect the grids and pipelines of multiple independent countries, but the rest of the world surely shares the need to assure a supply of energy that is not at risk of disruption from forces outside their control, be they wars, revolts, terrorism, piracy, embargoes, or economic blackmail.
The question is, will this latest crisis galvanize the needed action? Or, will the current problem dissipate, and will we resume business as usual until the next crisis strikes?