The permanent scaring of the energy crisis - a need for rethinking energy policies

The industrial revolution was based on cheap energy both from a sourcing perspective and from the technology. There is the energy input and the efficient conversion into power. The industrial revolution was explosive in those areas that cheap energy. As time passed, a critical part of the economy was the logistics associated with the transportation and delivery of cheap energy. It was cheap because the delivery and logistics were cheap and efficient.  Plastics, autos, materials, and chemicals, to name just a few, were all driven by cheap energy.  

When the foundation of cheap energy is altered, the result is an economic slowdown. It can be investment or geopolitical. It does not matter. Cheap and uninterrupted is disrupted. The real operating leverage of an economy is driven by energy even more so than credit. 

The Russian energy disruption is a permanent scar on the developed world, especially Europe. The cheap and uninterrupted power is moving to other parts of the world which is altering the center of gravity for economic production and power. Given the importance of energy for living standards, the geopolitics of energy logistics have to be addressed. This is a country policy issue and not a corporate policy. Energy policy is fundamental for providing a standard of living.

The Green revolution cannot occur if the current system cannot provide uninterrupted power. The efficiency of wind and solar is lower and there is the issue of production fluctuations. This may be solved but not currently. 

Standards of living and the focus of production are being altered beyond just a high-priced cold winter. Energy policies must be rethought, and new solutions must be proposed. The current system is broken, and the Russian cut-off just serves as a signal. Transitions and adjustments of complex systems are never easy.