Early Warning Systems for World Energy Crises

Different severe energy crises episodes occurred in the world in the last five decades. Energy crises lead to deterioration of international relations, economic crises, changes in monetary systems and social problems in countries. This paper aims to show the essential determinants of energy crises by developing a binary logit model which estimates the predictive ability of thirteen indicators in a sample that covers the period from January 1973 to December 2022. The empirical results show that the energy crises are mainly due to energy supply-demand imbalances (petroleum stocks, fossil energy production-consumption imbalance and changes in energy imports by country groups), energy investments (oil and natural gas drilling activities), economic and financial disruptions (inflation, dollar index, index of global real economic activity) and geopolitical risks. Additionally, the model is capable of accurately predicting the world energy crisis event months with 99% probability.