Scenario guides / Energy shortage
🛢️ Energy shortage
Energy is the input to every other industry, so an energy shortage is really a tax on the entire economy — collected by whoever still has energy to sell. Few scenarios divide winners and losers as cleanly.
What history shows
The 1973 oil embargo quadrupled crude prices in months and helped tip the West into stagflation: queues at petrol stations, double-digit inflation, and a lost decade for stocks and bonds alike. The 1979 Iranian revolution repeated the shock, doubling prices again and proving the first crisis was not a one-off.
Europe's 2022 gas crisis is the modern case study. After pipeline flows from Russia collapsed, Dutch TTF gas — Europe's benchmark — spiked to roughly €340 per MWh in August 2022, around ten times its historical norm. Utilities that had sold power forward at old prices needed rescuing (Germany's Uniper required one of the largest bailouts in corporate history). Fertiliser plants and aluminium smelters shut across the continent because energy cost more than their products were worth. Meanwhile oil and gas majors reported the highest profits in their histories, and shipowners of LNG tankers earned record charter rates.
Assets that have tended to gain
- Oil, gas and coal producers — the direct beneficiaries; scarcity prices flow straight to their bottom line.
- Energy infrastructure and shipping — pipelines, LNG terminals and tankers become chokepoints worth paying for.
- Renewables and nuclear (over time) — every energy crisis in history has accelerated investment in alternatives; 2022 triggered record solar and wind orders in Europe.
- Inflation-linked bonds — energy shocks feed straight into consumer prices.
Assets that have tended to suffer
- Airlines — fuel is often their single largest cost; hedged or not, sustained high prices crush margins.
- Chemicals, fertilisers, smelters and heavy industry — energy-intensive producers become uneconomic first.
- Transport and logistics — the cost of moving anything rises.
- Energy-importing economies' currencies and bonds — the euro fell below parity with the US dollar in 2022 for the first time in twenty years, driven substantially by the energy bill.
- Consumers and discretionary retail — every dollar spent at the pump or on heating is a dollar not spent elsewhere.
Wildcards and caveats
Energy shocks rarely travel alone: they cause inflation, often follow conflict, and if severe enough trigger recession — at which point energy demand, and prices, can collapse as fast as they rose (oil fell from $147 to under $40 during 2008). The cure for high prices, as commodity traders say, is high prices.