Remember the oil shocks of the 70s? This is going to be worse. Much worse.

(New York Times - 6yka.com)

Sri Lanka and Myanmar are rationalizing fuel consumption. The Philippines has implemented a four-day workweek to save gasoline and electricity. Bangladesh has briefly closed its universities to conserve energy for households and businesses. Across India, families and restaurants are cooking with wood due to gas shortages. Airlines are canceling flights.

As painful as the first phase of the energy crisis caused by the war with Iran has been, what comes next will be even worse. This week, the last shipments of oil and liquefied natural gas to Asia that passed through the Strait of Hormuz before it was closed are expected to arrive. The last tanker shipments to Europe are due to arrive in mid-April. After that, gasoline, diesel, LPG and natural gas reserves in many countries will be depleted. Oil prices could soar to 200 dollars per barrel if the war drags on.

Fatih Birol, head of the International Energy Agency, called this “the greatest global threat to energy security in history” – far worse than the 1970s oil crisis, the Covid pandemic or the Russian invasion of Ukraine in 2022. This conflict has disrupted much of the global oil and gas trade, and there is no way to quickly fill the void.

Countries like India, Indonesia, and Vietnam are responding to higher gas prices by burning more coal. But in the long run, the shock will accelerate the shift to cleaner technologies, especially in Asia and Europe. This is the first oil crisis in which clean alternatives to oil and gas—solar panels, wind turbines, electric vehicles, and batteries—are both cheap and widely available.

Fuel shortages have already spurred consumers to embrace these technologies. When the Philippines declared a national energy emergency on March 24, car buyers in Manila flocked to Chinese automaker BYD showrooms to buy electric vehicles (EVs). Solar system dealers and installers are reporting a surge in interest from German buyers. Heat pump installations are on the rise in the UK. Electric rickshaw sales are booming in Pakistan. Induction hobs are selling out at online retailers in India. In Vietnam, a conglomerate is reportedly looking to scrap plans to build the country’s largest liquefied natural gas power plant and instead focus on a renewable energy and battery storage project.

Since the start of the war, the market value of each of China's three largest battery companies has increased by approximately 20 percent, or a total of $70 billion.

For governments weighing how quickly to transition to clean energy, Pakistan’s recent history may offer some lessons. The country was hit hard by the energy shock that followed Russia’s invasion of Ukraine in 2022. It couldn’t afford suddenly prohibitively expensive gas imports, so many of its scheduled deliveries were diverted to wealthier European buyers.

But a flood of cheap solar panels from China has transformed Pakistan's energy system and helped insulate the country from a current shortage of liquefied natural gas. Solar power now produces nearly 30 percent of its electricity, compared to just 3 percent in 2020. The Center for Energy and Clean Air Research estimates that the solar boom will help Pakistan avoid $7 billion worth of fossil fuel imports this year. That protects Pakistanis from real suffering.

With solar energy, “you can significantly reduce your dependence on fossil fuels within just a few years,” Lauri Myllyvirta, the think tank’s chief analyst, told me.

This is important because it could be years before oil and gas supplies return to pre-war levels. After Iranian missiles hit the Ras Laffan liquefied natural gas export facility in Qatar, the country completely halted production of the fuel, abruptly withdrawing 20 percent world supply from the market. Officials predict it will take three to five years to fully restart the facility, the world’s largest. Other operators in the region have also reduced oil and gas production as they run out of storage space. These wells cannot be turned on like a light switch; it will take months for production to ramp up again, creating even more pressure to find alternatives.

The war will also weigh on the clean energy sector. As inflation and interest rates rise, some investors may struggle to finance new energy installations and grid projects. Supply chains for key items, such as transformers, aluminum, and copper wire, are now facing their own bottlenecks and disruptions. The chaos makes everything more difficult and expensive — whether you’re building polluting or clean energy infrastructure.

Countries like India will need to make their coal-fired power grids flexible enough to incorporate large amounts of wind and solar power. To meet the growing demand for clean technology, governments must decide how much to invest in their own factories to mass-produce all those solar panels, heat pumps and electric vehicles, and what tariffs to impose on imported versions, says Tim Sahaj, co-director of the Net Zero Industrial Policy Lab at Johns Hopkins University. But countries and companies can build renewable energy capacity much faster than they can build, say, huge LNG terminals, pipelines and power plants.

Achieving energy security is now an absolute imperative. This means not only installing more wind turbines, solar panels and batteries, but also developing domestic capacities for clean technology production, and electrifying household heating and transport. As their energy autonomy improves, more and more countries will see drastic reductions in health-damaging air pollution and climate-warming emissions.

China has made the most progress on this path: over the past decade, it has electrified large parts of its transportation and industrial sectors and cut oil consumption by more than a million barrels a day, providing itself with a good safety cushion during the crisis with Iran. Chinese companies have pledged to invest more than $227 billion in capacity in other countries to produce EVs, chargers, batteries, solar power, wind power and other clean technologies, according to a recent report from Mr. Sahaj’s lab at Johns Hopkins University.

China's reduced exposure to energy shocks is the result of careful planning, Mr. Sahaj said, dating back to the 2003 US invasion of Iraq, which triggered a long-term rise in oil prices. Future oil shocks are inevitable. “Electrification will be seen as a shock absorber,” he said.

That option remains available to American consumers, who could soon be eyeing electric vehicles and heat pumps — even though the Trump administration has eliminated incentives that made them more affordable.

Just last week, I listened to U.S. Energy Secretary Chris Wright, speaking in Houston at the world’s largest annual energy conference, portray the Trump administration’s efforts to encourage oil and gas production as a kind of humanitarian project. “The truth is simple: Energy is life, and the world needs massively more of it,” he declared.

If there is an irony here, it is a tragic one. The war, by choice of the administration, has made energy dangerously expensive in almost every corner of the planet, causing needless suffering. The most fossil-fuel-friendly government in recent U.S. history has shown us all how risky reliance on oil and gas can be - and taught the world that true energy security lies in accelerating toward a cleaner, electrified future.