Energy Crisis

(redirected from Electricity crisis)
Also found in: Dictionary.

Energy Crisis


an upheaval in the world capitalist economy and one of its structural crises, caused by the increased shortage of petroleum in the developed capitalist countries between 1971 and 1974.

The energy crisis, which developed as part of the general crisis of raw materials, was manifested in such phenomena as the growing inability of the developed capitalist countries to meet their domestic needs through primary energy sources extracted within their national borders and a radical breakdown in the colonial-monopolistic system under which petroleum was supplied by the developing countries. It also lay behind the nationalization of foreign oil concessions and an unprecedented increase, instituted by the developing countries, in the world market price of petroleum, which went up nearly fivefold in this period; the increase was responsible for a marked deterioration in the balance of payments of the developed capitalist countries. The crisis resulted in the accumulation of enormous quantities of dollars from the sale of petroleum by the developing petroleum-extracting countries.

After World War II, the developed capitalist countries rapidly became more dependent on petroleum imported from the third world, which held nine-tenths of the explored oil reserves of the capitalist world. Liquid fuel became the principal source of energy, for two reasons: first, it had several technological advantages over coal; second, the international oil cartel used low petroleum prices to help force out coal as a principal source of energy and did not encourage exploration for oil in the developed capitalist countries (seeCARTEL, INTERNATIONAL).

In the 1950’s and 1960’s a serious contradiction developed between reserves and consumption of primary energy sources in the capitalist world. According to some estimates, coal made up 93 percent of potential fuel resources; petroleum, natural gas, and other sources made up 7 percent. Coal accounted, however, for only 23 percent of the energy consumed; petroleum, natural gas, and other types of fuel accounted for 77 percent. The developed capitalist countries experienced a sharp rise in the importation of cheap energy sources, chiefly petroleum from the developing countries; in several instances, the production of domestic energy sources ceased to grow. Between 1950 and 1972, imports of crude oil to the developed capitalist countries increased severalfold—in Western Europe, by a factor of 17.

Until the early 1970’s the international oil cartel, in which the oil monopolies of the USA held a dominant position, continued to rule the petroleum industry of the capitalist world. In 1972 the cartel accounted for about half of the petroleum extracted in the capitalist countries, and it controlled 85–90 percent of the petroleum exported from the developing countries. The cartel realized huge profits, owing to the difference between the low purchase prices set by the monopolies for oil from the developing countries—its exporters—and the relatively high prices for petroleum products in the importing countries.

Having set out on the path of independent development, the petroleum-producing countries began a stubborn struggle to limit the extent and influence of foreign capital by raising taxes on concessionary companies, acquiring shares in the companies’ capital, establishing a state sector in the petroleum industry, and nationalizing foreign concessions. To protect their national interests and pursue a coordinated policy, they formed the Organization of Petroleum Exporting Countries (OPEC) in 1960 and the Organization of Arab Petroleum Exporting Countries (OAPEC) in 1968 (seePETROLEUM MONOPOLIES OF THE CAPITALIST COUNTRIES).

By the early 1970’s OPEC and OAPEC had become powerful enough to oppose the international oil cartel, and the OPEC countries abruptly increased the pressure on the petroleum monopolies. They were able to take this step because of the growing national liberation movement, the nationalization of oil companies in Algeria, Libya, and Iraq, and a sharp rise in demand on the world capitalist market for energy sources during the cyclic upswing in the capitalist economy in 1972 and 1973. During the military actions in the Middle East in October 1973, the Arab countries imposed a selective embargo on petroleum exports to the USA and certain other capitalist countries; shortly thereafter, the OPEC countries quadrupled the price of oil.

In response to continued inflation in the capitalist world and a decrease in the income of the oil monopolies in the developing countries, the international oil cartel artificially held up deliveries of oil to importers in order to force the governments of Western Europe to raise prices for liquid fuel. This action caused interruptions in oil supply and led to a critical shortage. The cartel, which was able to pass on the increase in purchase prices to the consumer, reaped huge profits.

The rise in oil prices in 1973 and 1974 resulted in substantial deficits in the balances of trade and the balances of payments of the developed capitalist countries. The struggle among the imperialists to ensure reliable deliveries of petroleum from the OPEC countries intensified. At the same time, the Western countries took a number of steps to ease their dependence on imported petroleum. They expanded development of their own natural sources of fuel, primarily coal but also petroleum in the North Sea and Alaska. They conserved petroleum and expanded strategic reserves; in addition, they stepped up research on the exploitation of alternative sources of liquid fuel, such as coal, shale, and bituminous sandstones, and research on other forms of energy, including solar, nuclear, and geothermal energy. Finally, they united their efforts to fight OPEC and force a split in its ranks. These measures, together with the slow recovery rate of the capitalist economy after the crisis of 1974–75, made it difficult for OPEC to combat inflation and led to a decrease in oil prices.

A consequence of the energy crisis was the nationalization of nearly all the concessions of the international oil cartel in the OPEC countries between 1972 and 1977. As a result of nationalization, increased oil prices, and higher taxes on foreign companies, OPEC members experienced a tenfold increase in income between 1972 and 1974, reaching $100 billion; by 1977 the figure stood at $130 billion.

The countries of the Persian Gulf began receiving the bulk of the differential rent, and part of the monopoly rent, from the extraction and export of petroleum; as a result, they developed into a new financial center of the capitalist world and became major

Table 1. World use of energy (converted to a standard fuel of 7,000 Calories; billion tons)
2Figures for hydroelectric and atomic energy in the fuel balance are calculated according to the specific fuel consumption of the fossilfuel-fired steam power plants generally used
3includes wood and other noncommercial sources
Coal ...............0.721.341.882.092.282.4–2.7
Petroleum ...............–4.5
Natural gas ...............–3.0
Hydroelectric2 ...............
Atomic2 ...............0.030.60–0.70
Other3 ...............0.500.600.700.700.650.60
Total ...............–12

exporters of capital (petrodollars), primarily to the USA and Western Europe, as well as a source of aid to the developing countries. Influenced by the actions of the OPEC countries, many developing countries nationalized foreign concessions and joined together to form international associations of exporters of various types of raw materials.

With the support of the socialist countries, the developing countries have come forward with a program for a “new world economic order” that contains several basic demands, including a change in the existing structure and mechanism of the international capitalist division of labor and the implementation of broad international cooperation in order to resolve world economic problems in an equitable and just manner, with due regard for the special needs of the developing countries, including the least developed countries. The program also calls for the recognition of the absolute sovereignty of every country in the use of its own natural resources and in the development of its economy and demands full compensation to the peoples of the developing countries for the plundering of their natural resources by the imperialist countries.

The energy crisis testifies to the inability of capitalism to overcome the antagonistic contradictions of socioeconomic development and the scientific and technological revolution. It shows that the international division of labor between the imperialist and developing countries that has survived from the colonial period is in a critical state. The crisis provides evidence of the exacerbation of competition among the great monopolies and attests to the growing intensity of the developing countries’ struggle for political and economic independence.


Energeticheskii krizis v kapitalisticheskom mire. Edited by E. M. Primakov. Moscow, 1975.
Uglublenie obshchego krizisa kapitalizma. Edited by N. N. Inozemtsev. Moscow, 1976. Chapter 9.


References in periodicals archive ?
Melhem said that the solution to the electricity crisis in Gaza and improving efficiency is not possible unless the reconciliation government is fully in control of the Gaza Strip, and as long as the electricity distribution company, which collects the bills, does not transfer the revenues to the government treasury.
In current situation, role of CPEC is vital as thousands of megawatts will be available by 2018 which will bring an end to long electricity crisis in the country.
But Nazarian should not need to resort to magic, he should be able to implement long-term plans to alleviate the frankly now embarrassing electricity crisis. So-called developing countries around the world have better power situations than in Lebanon, supposedly one of the more developed countries in the region.
In his letter, Mr Leghari had said the electricity crisis was a result of mismanagement, inefficiencies and commercial mishandling by KE.
It stressed that "the solution to the electricity crisis in the Gaza Strip is by ending the siege imposed on the Gaza Strip, ending the causes of division following the 2007 coup to allow the government to enforce the law and to reform the structure of the distribution company and energy sector in general."
Also according to the statement, the electricity crisis is due in particular to the policy adopted by the Ministers of Energy during the past seven years.
While speaking at a function in Lahore on Tuesday to mark the Foundation Day of WAPDA, the minister said that the electricity crisis in the country would be overcome in the next three years after enough electricity would be added to the national grid from the underconstruction power projects.
Summary: The General Labor Confederation (GLC), Lebanon's largest labor union, slammed the performance of the government of PM Mikati, calling the Cabinet's approach to the electricity crisis absolutely "preposterous."
With no fuel reported to be coming through the tunnels beneath Gaza and Egypt for the past two months, Gaza has been experiencing a widespread electricity crisis, with power outages reportedly lasting up to 18 hours a day in some areas.
"The council agreed also on the proposals presented by the ministerial delegation of Basra regarding easing the electricity crisis in the province," said the statement received by Aswat al-Iraq news agency.
Electricity Crisis Hitting Lebanon Will Not Be Resolved Within 10 Days
In a press conference held on April 17, presidents of seven industrial estates of Karachi announced an industrial shutdown if the government failed to resolve water and electricity crisis within 48 hours.

Full browser ?