Recent supply crises are undermining the gas industry's image as a reliable, affordable, and flexible energy source. The IEA's head warns this 'long shadow' could permanently alter its role in the global energy mix, as trust and perception are eroded regardless of short-term price fluctuations.

The current energy disruption involves a loss of 12 million barrels of oil per day, exceeding the combined total of the 1973 and 1979 crises. Additionally, natural gas losses are greater than during the Russia-Ukraine crisis, making this the largest energy security threat in history.

IEA Executive Director Fatih Birol quantifies the current energy crisis, stating that the loss of supply is greater than the 1973 oil crisis, the 1979 oil crisis, and the 2022 Russian gas crisis put together, making it an unprecedented global security threat.

Fatih Birol identifies three critical errors that have undermined Europe's energy security and competitiveness: depending on a single gas supplier (Russia), prematurely turning away from nuclear power, and failing to maintain its early lead in solar panel manufacturing, which China now dominates.

While not technically inflation, rising energy costs are perceived as such by working-class citizens because they make everything more expensive. This direct hit to their finances is a powerful driver of political dissatisfaction, regardless of other economic indicators.

Drawing parallels to the 1970s oil shocks which spurred nuclear power and fuel efficiency, the IEA head predicts the current crisis will not only boost renewables but also drive a strong comeback for nuclear and, counterintuitively, a resurgence of coal in Asia due to high gas prices.

While media focuses on Europe and Japan, the IEA head highlights that the biggest victims of the energy crisis are developing countries. Lacking hard currency to compete for expensive oil and gas, they face severe economic strain, potential energy rationing, and a repeat of the 1970s foreign debt spirals.

Regardless of the Iran war's duration, the conflict ensures Europe will face structurally higher energy costs, damaging its industrial competitiveness. This is causing macro investors to sour on European equities and credit, even if the foreign exchange market has not yet fully reflected this risk.

Europe faces a critical conflict between its ambitious net-zero targets and its economic health. High energy costs and a heavy regulatory burden, designed without market realities in mind, are causing companies to close facilities or move investment to the U.S., forcing a difficult reassessment.