1. Executive Summary

Introduction – this strategic analysis: forecasts an emerging and prolonged global energy crisis; sets out consequential implications for Cornwall; recommends preparatory contingency actions for Cornwall Council and the Cornwall Leadership Board.

Key Points:

• Global Energy Crisis – the emerging crisis is triggered by the 3rd Gulf War, but for structural reasons – and unlike the 1973 & 1979 oil shocks - a deep and prolonged crisis is in prospect.

• Energy Price Volatility – oil & gas prices are forecast to rise over time, with volatile fluctuations, generally trending upwards because of supply constraints, with occasional reductions due to demand destruction. Rising oil & gas prices will increase the costs of all other energy sources (coal, nuclear, renewables) as diesel underpins all their supply chains.

• Renewables & Nuclear - investments in sources such as floating offshore wind (FLOW) are important but cannot scale quickly enough to offset declining oil & gas supplies. They also generate electricity, not the liquid fuels required for transport and heavy plant, for which synthetic fuels (e.g. methanol, ammonia) are not yet viable replacements at scale.

• Economic & Societal Consequences – in reality, the “cost-of-living crisis” is a “cost-of-energy crisis”. This will intensify over time, leading to: persistent CPI increases; GDP contraction; contracting government revenues & reducing public spending headroom.

• Critical Regional Vulnerabilities – Cornwall is critically dependent on diesel for: critical sectors (agriculture, fishing, food-logistics, water, utilities, communications); essential sectors (emergency services, health, public transport).

• Contingency Preparations – preparatory actions should begin immediately and focus on:

  • Competence & Insight – increase energy literacy in senior politicians and officers, develop county modelling capacity, and secure expert professional support.

  • County Energy Review – assess supply & demand situations, particularly across:

    • Critical sectors – food, water, energy, utilities, communications.

    • Essential Sectors – emergency services, key public services, key industries.

• Operational Planning – undertake preliminary crisis planning:

  • Review crisis management arrangements, drawing on COVID-19 & Storm Gorriti lessons.

  • Review and agree energy prioritisation (”triage”).

  • Develop scenarios and deduce contingency plans.

• Communications & Public Education – develop public education policies, to improve energy awareness in the leadership, key institutions, and then the public.

Conclusion – based on this forecast, Cornwall’s leaders face a simple choice:

• Do Nothing – risk reactive, disorderly civil responses and avoidable disruption.

• Prepare – accept the challenges and act early to maintain societal stability.

This strategic analysis recommends Prepare.

2. Introduction

I am writing to alert you, as Cornish leaders, to a global energy crisis that I anticipated in 2013^[1], but which I now judge is starting to unfold, hastened by the Russo-Ukrainian War and finally triggered by the Iran War.

Unlike the last two global energy crises – the oil shocks of 1973 and 1979 – I judge this one will be of extended duration, at least two decades and possibly more, and beyond HMG’s capacity to solve, whichever political party, or combination of parties, is in power.

Except for Norway and Russia, no European country, nor British nation, nor English county is yet prepared for the energy shortages that are to come. Preparations will not solve the severe reductions now in prospect. But they can and should help us retain the confidence of the county and help avoid the societal disorder that could otherwise ensue.

3. Context – Structural

The global energy context is critical, but its true nature is poorly understood. Not only throughout the Western establishment; but also by almost all international economists; and, more surprisingly, throughout the West’s energy commentariat, few of whom hail from the energy industry. The crucial misunderstood point is this: although the Iranian War is the trigger for the crisis, the underlying foundations lie in the structural dynamics^[2] of the oil & gas markets.

As a result, I anticipate the oil & gas price rises that started in 2022 with the Russo-Ukraine War, and are now intensifying thanks to the Gulf War III trigger, are likely to rise rapidly in the coming months and will be unlikely to reduce over the remainder of the decade. The price graph will not, though, be smooth. Each price notch up will likely subdue global economic demand, in turn suppressing oil prices for a time, before more global oil supply shortages again result in rising oil prices, and the cycle repeats. The critical fuels in the supply chain for all other energy sources – natural gas, coal, nuclear and renewables – are refined oil products, in particular diesel, thus as the oil price rises, so too will the price of all other energy sources.

The problem is not only the scale of primary energy supplies needed – hydrocarbons currently provide over 80% of primary global energy supplies – but also the nature. This is because the energy sources that have the potential to grow – nuclear and renewables – produce electricity, and in the latter’s case on an intermittent basis. This is not to say that energy sources such as floating offshore wind (FLOW) cannot turn the dial on Britain’s overall demand. They can in the long term, and I expect HMG rapidly to ramp up their investments in such sources, as the scale and urgency of the challenge becomes clearer. But nationally important though these critical British sources will become, it would be quite wrong for me to present them as the answer to our short-term prayers, because they are not.

This is for two reasons. First, nuclear and renewable ramp-up cannot be achieved at the pace and scale needed to fill the short-to-medium-term energy gap that is now rapidly emerging. Second, neither FLOW nor any other non-hydrocarbon electrical power source – renewable or nuclear – is yet able to produce the synthetic fuels needed to fill the gap created by the fall in oil and gas production. Such synthetic fuels do exist – ammonia and methanol appear the most promising – but none are yet ready to replace diesel and the other key refined oil fuels.

4. Consequences – Increasing Energy Shortages & Prices

At the national level, increases in all primary energy prices will exacerbate existing societal challenges.

First, it will intensify the ‘cost-of-living Crisis’ – which is a symptom of the ‘cost-of-energy crisis – as increasing energy costs in all supply chains feed into increasing consumer costs, including in basic foodstuffs, pharmaceuticals and indeed almost all manufactured goods.

Second, it will lead to reductions in GDP, and thus to an extended recession. In a lecture in Oxford in 2015^[3], I forecast that we would see a reduction in GDP of 24% over this decade – equivalent in economic terms, to the Great Depression – and I have seen nothing since to move me from this forecast. There will likely be attempts at economic stimulus to help us “get back to growth.” These must, though, fail because, whilst we can print new money and create new debt, we cannot print new energy and especially not new oil.

Third, with falling primary energy sources and falling GDP, central government tax receipts will fall, as must the monies available to redistribute to the regions.

At the county level, rising petrol prices will increasingly check domestic and business car usage, in turn playing negatively into the prospects of key Cornish sectors, most obviously tourism. The same will be true with rising kerosene prices, which will impact the aviation sector in general and Cornwall Airport in particular. But the one to watch is diesel.

Diesel fuels the prime movers in all our critical sectors. All Cornish farming, fishing and food logistics rely on diesel. The same is true of SW Water, who reported to me in 2019 that diesel was their critical dependency. WPD are in a slightly better position, with a significant shift to electric business vehicles, but their heavy plant is all still diesel powered. The same is also largely true of our emergency and essential services: ambulances, fire service vehicles, police vans, council refuse vehicles, school buses, construction plant, and so on. All diesel driven.

It would be a mistake to assume that Britain can easily source diesel elsewhere. It is well understood that Russia has been the source of Europe’s gas supplies, but less well known that Russia has also been the source of 40% of Europe’s refined diesel, all no longer available to us thanks to economic sanctions by Europe, with the situation now exacerbated by events in the Gulf. I thus anticipate with rising analytic confidence that we will see increased diesel shortages over the remainder of this year. I further assess that these shortages will not be rectified in the short or medium term.

So, because the evidence is increasingly clear that refined oil product supply reductions are now upon us, and largely beyond national control, we can deduce that we are faced with an accelerated and likely chaotic energy transition, whether we like it or not.

5. Campaign – Energy Triage & Transition

If this forecast is correct, or even simply plausible enough to be of concern, we are all faced with a simple choice: to prepare or not to prepare. Preparation seems to me the wiser choice for regional leaders, and the responsible thing to do.

On this basis, my starting point for such preparations would be to plan on the assumption of: first, an initially acute energy crisis, as the nation works out how to cope, leading to; second, a chronic extended energy crisis, of at least two decades, as the country comes to terms with living with significantly reduced levels of energy available to British society. On this basis, I recommend we start work on a strategy based around four primary ‘lines of action’:

a. Insight

First and critically, it is essential that we develop the energy insight needed to allow us to make wise short-term, medium-term, and long-term decisions. This will require, amongst other things, a programme of energy education for Cornwall’s senior leaders. It would be beneficial to draw other energy professionals into this education programme, both from local industry and University of Exeter’s energy academics. We should also, with these energy experts’ help and the county’s combined public sector, private industry and academic resources, develop a county-wide mathematical energy model^[4], so that individual decisions we may need to make can be made with the support of quantitative analysis of the broad county context.

b. Regional Energy Review

Informed by the developing energy modelling, we should undertake a baseline review of Cornwall’s energy supply and demand, according to the following priorities:

• Critical Sectors – the critical sectors for the functioning of a modernised Western society are food (farming, fishing, food-processing and food-logistics), water, energy, and communications.

• Essential Services – energy reviews should be undertaken of Cornwall’s essential services, most obviously the energy-intensive areas of Cornwall Council, together with other key public sector entities, such as emergency services, health and education.

• Industrial Sectors – energy reviews should be undertaken of the industrial sectors in Cornwall that have a national role to play in energy transition, most obviously space, mining, and energy.

• Discretionary Sectors – finally, energy reviews should be undertaken of those sectors that are of a discretionary nature in the functioning of a modern society, such as the arts, culture, retail, and tourism. Where, sad to say, the first cuts must most logically fall, in the event of unavoidable energy supply shortages.

These reviews should be rough and ready, and prompt. What is needed is a rough-order-of-magnitude (ROM) analysis, so we can get a sense of the overall picture. But these ROM reviews will also provide us with an initial baseline, upon which more detailed analysis can continue.

c. Strategic & Operational Planning

In parallel, it will be wise to develop a strategic plan to guide Cornwall’s short-term, medium-term and long-term actions, in turn providing a basis for scenario analysis, operational planning, and contingency gaming. This strategy should include, but not be limited to:

• Governance – arrangements should be considered for energy crisis governance, in which the Cornwall Leadership Board has a potentially central role to play. We should draw, too, on COVID-19 and Storm Goretti crisis management experiences and best practice. We may also wish to review the relevant legislative powers sitting with regional government; together with potential national sources of support, most obviously from the armed forces under Military Aid to the Civil Authority (MACA) and/or Military Aid to the Civil Power (MACP) mandates. It will be important, given the crisis will likely be measured in decades, that the governance arrangements allow us not only to respond to the short-term imperatives, but also take a medium and long-term view, can survive changes in political leadership, and ideally have cross-party engagement and support.

• Triage – we will need to identify priorities for energy supplies, in the increasingly likely event that, on occasion, all regional energy demands cannot be met. The order of the bullets listed in the Energy Review section above provides a first basis for such triage, but it is essential that a cross-sector and cross-Cornwall view be taken and talked through. The discussions and decisions therein will not be easy, but better to talk them through now, before the event, rather than make up things as the first urgent mini-supply crises unfold and matters then intensify.

• Operational Planning – once the broad strategy, governance arrangements and approach to triage are agreed, work should then start on operational planning, supported by scenario analysis and contingency gaming. The aim of this work should be twofold: first, to design plans for short-term contingencies, such as unplanned diesel fuel shortages or electrical power outages; second, to rough out a medium-term and long-term county-wide operational plan for energy transition. Utilities and other relevant private sector companies will need to be brought into these discussions, at an appropriate time and on a case-by-case basis.

The strategy, strategic and operational plans will, in the early days, be imperfect, as is always the case with early campaign design. But if we wish to be able to make wise decisions and take wise actions when the time comes, it is essential to start the work immediately and begin to develop a framework for our thinking.

d. Communications & Public Education

As the early work gets underway and the early results are available for review, we will need to develop a parallel programme of communications and public education. This will need to start with leaders, officers and staff within regional governance and the critical sectors, then broaden to include the wider public.

The latter is, of course, a delicate political matter: we do not want to frighten the horses prematurely; equally, forewarned is forearmed, and it would be irresponsible to keep from the public something that we know to be on the horizon. It may be, though, that the Iranian War, and its continuing potential impact on global energy supplies, provides a solid contingency logic to explain our contingency work and public education briefings. Furthermore, as the crisis takes hold, if the Cornish public are aware that contingency thinking and planning is well established, it should lead to a much higher degree of public confidence in local government.

6. Conclusion

To conclude, I have not formally written before on this matter, for two reasons. First, although I anticipated a situation such as this as far back as 2013, the timing was very difficult to judge, and I needed to see more evidence to confirm the crisis’s actual inception. Second, from experience in lecturing on energy transition, the messages above rarely land well, and it was in turn important to me to have sufficient evidence to rebut the ‘crying wolf’ charge. If the picture I have painted sounds sombre, please rest assured that my purpose is simply to come at the matter with forensic realism, based on my insights into geopolitical events in West Asia, particularly the Strait of Hormuz, together with my own energy and economic modelling and what the associated numbers tell me.

To reiterate, the forecasts that I have set out are based on especially strong scientific evidence — geological, physical, and energy engineering — wrapped within an equally strong mathematical concept, and the events that are now unfolding align all too well with the pattern that this concept predicts^[5]. I do realise that the predicted prospects are wholly unappetising, politically, but that does not change the evidence as I see it, nor the likely pattern of unfolding events.

Finally, and notwithstanding over a decade and a half working in the energy sector, I am aware of no technological miracle that will save the day. I am thus clear that we are committed to this energy transition journey, like it or not. Which in turn means our strategic choice is clear:

• Prepare – to prepare, with all the associated political, administrative and resource challenges that this entails.

• Do Nothing – or to ignore the forecast, and to instead deal with matters in a wholly ad hoc and probably chaotic way. And, in unhappy parallel, deal with our own consciences, given that we will have deliberately chosen to ignore this forecast and consciously decided not to prepare.

On next steps, once you have had the chance to digest this analysis, I would of course be only too happy to provide a follow-up briefing. From my experience in military campaign planning, I would advise an important first step would be a brief to the Cabinet and the Cornwall Leadership Board, so that they too are similarly alerted and can, in parallel, begin to get their heads around our shared challenges.

Steve Jermy

31 March 2026

^[1] publications.parliament.uk – Defence Committee, Session 2013–14

^[2] There are two primary factors underlying these structural dynamics. First, global oil production is now on a peak plateau, with supply forecast to fall, due to increasing supply constraints, from the late 2020s onwards. Second, the global oil & gas markets operate in a situation of efficient dynamic balance, between supply & demand and moderated by price, but with little resilience and with little if any capacity to accept an oil shock of 20% of oil supply and 25% of gas supply without catastrophic consequences for the global economy.

^[3] podcasts.ox.ac.uk – Changing Character of War series

^[4] It is an unfortunate lost opportunity that this model was not developed during the Local Area Energy Plan (LAEP) works, which it would have been had the Council selected Celtic Sea Power and Regen for the project.

^[5] You may find colleagues who initially challenge these professional judgements. My advice, in each case, is to ask for their contrary geological, engineering, and mathematical evidence to support their challenge. In over 12 years of presenting on the matter, including to some very learned audiences and most recently as January 2026, at the Stokes Society, Cambridge University’s premier science association, I have yet to be offered any such evidence.

The Follow-on Broadcast?

Since my conversation with Tucker Carlson released this Mon, I’m delighted to see that he has today released a follow-on broadcast on the energy crisis, including with Chris Martenson who’s work I’ve been following for years. If parts of their discussion sound extremely familiar to those who’ve listened to my discussion with Tucker, I think that’s very helpful convergence.

Two energy analysts, working independently from different data and different concepts, arriving at much the same place. That both wars now underway are wars with profound energy consequences. That the closure of the Strait of Hormuz has taken a very large volume of oil off the market: at a time when significant oil volumes were already missing from the market - thanks to the West’s self-defeating sanctions on Russia. That futures price quoted on our screen and the price actually being paid at the pump and the refinery gate are very different numbers. That the US is not energy independent, far from it, and will not be protected from price rises. That Europe and the Far East are exceptionally vulmernable. That ultimately, the consequences must show up in future GDP data - in other words, we are in for a severe global recession, with some of the world’s regions more exposed than others.

When independent analysts converge like that, its worth taking seriously - a second, unrelated view confirming the same underlying picture. Worth taking seriously and worth thinking about how we might all prepare.

What’s next

Early next week, I will upload a detailed letter that I wrote to my local government, on 30 March 2026, about how they should prepare for the energy crisis, if and when it came. I hope, within this letter, you will find useful the structure of how I’d been thinking about this.

In the months ahead, for my paid subscribers I will also start to set out and explore the concept that I’ve been working on for nearly a decade, macro-energetics - a framework where I use energy analysis, rather than conventional economic maths and indicators, to forecast macroeconomic outcomes.

I’m using macro-energetics right now to think about the global and regional recession risks, as a result of the Hormuz closure and the wider energy shock, and will put pen to paper on this next month.

More soon.

Steve

The consequences of the closure have not yet arrived in our economies, largely due to the lag in the international oil system. But they are coming. I expect to see this from July 2026 onwards, but will be updating the forecast during this month.