History offers a stark warning: the cheapest way to avoid future energy crises is to remove market barriers, not pile on more. From the 1970s oil shock to the AI-driven electricity surge today, every crisis was worsened by regulation that blocked supply.
The 1973 Arab oil embargo froze global markets. The U.S. response—price controls and allocation rules—made shortages worse. Gas lines stretched for blocks. The lesson? Government intervention in pricing and distribution often backfires. Today, a similar pattern is emerging. The AI boom is driving an unprecedented spike in electricity demand from data centers. Utility companies warn of grid strain and blackouts. Policymakers are tempted to impose caps, subsidies, or new permitting hurdles.
Context is key. The 1970s crisis eventually receded when President Reagan deregulated oil prices and removed allocation controls. Supply surged. Prices fell. The market worked. Fast forward to 2025: the U.S. faces a new energy crunch. Data center power demand is projected to grow 20% annually through 2030. Solar and wind farms are stuck in interconnection queues averaging five years. Natural gas pipelines face permitting delays. The cheapest fix, history shows, is to tear down these barriers.
Key details matter. The 1973 embargo cut oil supply by 5 million barrels per day. Price controls kept gasoline artificially cheap, causing demand to outstrip supply. After controls were lifted in 1981, domestic production rose 15% in two years. Today, the U.S. has over 1,200 gigawatts of generation capacity waiting to connect to the grid. Removing interconnection bottlenecks could unlock enough clean energy to power 100 million homes. Named experts like energy historian Vaclav Smil argue that "the single biggest obstacle to energy transition is not technology, but regulation."
Analysis shows the pattern repeats. In the 2000s, California's energy crisis was worsened by flawed deregulation that left supply rigid. In Europe today, high electricity prices stem from carbon taxes and market design flaws, not scarcity. The common thread: artificial constraints on supply create higher costs and greater volatility. As AI reshapes the economy, policymakers must resist the urge to micromanage markets. Instead, they should streamline siting, permitting, and grid reforms.
Outlook: The next energy crisis is not inevitable. If the U.S. learns from the 1970s, it could avoid future energy crises by focusing on market-based solutions. Key milestones to watch include FERC's interconnection reform rule due in late 2025, state-level permitting overhauls in Texas and California, and the growth of colocation agreements between data center operators and power generators. The cheapest kilowatt-hour is the one that never gets blocked.
Energy
→ Neutral
History Can Teach Us How To Avoid Future Energy Crises
From the 1970s oil crisis to today's AI power surge, history shows the cheapest energy fix is removing market barriers, not creating them.
Mindy Lubber, Contributor
Forbes
3 min read
6/10
Key Takeaways
- The 1973 Arab oil embargo cut global supply by 5 million barrels per day; U.S. price controls and allocation rules worsened shortages and created gas lines.
- Deregulation under President Reagan in 1981 removed price controls, leading to a 15% increase in domestic oil production within two years and stabilized markets.
- Today, over 1,200 gigawatts of generation capacity—mostly solar, wind, and natural gas—are stuck in interconnection queues with an average wait of five years.
- AI-driven data center electricity demand is projected to grow 20% annually through 2030, adding the equivalent of 50 new nuclear plants of load.
- The cheapest energy fix remains removing market barriers: streamlining permitting, reducing interconnection delays, and ending price controls—repeatedly proven across historical crises.
Frequently Asked Questions
The 1973 Arab oil embargo cut oil supply by 5 million barrels per day. U.S. price controls and allocation rules worsened the shortage, creating long gas lines and economic disruption.
History shows that removing market barriers—such as price controls, permitting delays, and interconnection bottlenecks—is the cheapest and most effective way. Deregulation in the 1980s stabilized oil markets after the 1970s crisis.
AI and data center electricity demand is projected to grow 20% annually through 2030. This surge is straining grids and prompting calls for faster permitting and grid reform to avoid reliability issues.
Market barriers like price controls, slow permitting, and interconnection queues artificially restrict supply. This drives up costs, creates shortages, and makes energy systems more volatile, as seen in the 1970s and today.
The cheapest fix is to remove regulatory and market barriers that block new supply. Streamlining siting, permitting, and grid interconnection can unlock vast amounts of generation capacity without taxpayer subsidies.
The key lesson is that artificial constraints worsen shortages. Just as deregulation ended the 1970s oil crisis, removing barriers to clean energy and grid modernization can meet AI's rising demand without crises.
Topics
Original source
www.forbes.com
Discussion
Join the discussion
Sign in to post a comment or reply.
No comments yet. Be the first to share your thoughts!