Engineer-Poet,

you make many a good point and in order to argue against, you also had to simplify.

So, let's try to make it more complex, shall we.

• All risks have probabilities. If we say things can happen, we do not necessarily mean with 100% likelihood. Agreed?
• Risks can have primary, secondary, tertiary, etc. effects. Some instant. Some delayed. Often most with negative feedbacks. Some may have positive feedbacks. Agreed?
• A highly hard coupled system (i.e. not able to reconfigure in real time on the fly) with a high level complexity (many parts, distributed responsibility) and high pressure on utility (utilization with near max capacity, with decreasing safety margins) is more likely prone to catastrophic failure. Agreed?

Now, again, to restate - this doesn't mean that one is automatically doomer, believes in collapse or thinks the world will end tomorrow.

This is just a way to think about big risks, with perhaps even small probabilities, but potentially very big and hard to predict consequences.

With that away, let's consider a real world scenario of chained events.

1. Fast growing economy (US and worldwide) meaning high level of oil and electricity use. Utilization rates are high for all systems.
2. A statistically colder and longer winter, increasing heating and electricity use of all fossil fuels
3. Tight margins and very little spare capacity in oil and natural gas supply vs demand.
4. Already relatively high prices, but for the past relatively steady prices (i.e. not driving a lot of demand destruction, like price spikes do)
5. A fairly big, unexpected and unmitigated drop in availability of oil for refineries, transport and power generation (back up fuel).
6. Increased pressure on natural gas demand, leading to rationing and shortages.
7. People start compensating with electricity to heat their homes and buildings as availability of fossils for heating is limited.
8. Lack of natural gas and back up supply leads to local electricity rationing.
9. System utilization rates go near 100%, local power outages start to occur.
10. A failure in a grid causes a cascade that spreads fairly wide.
11. An attempt to raise production back online is crimped by remaining electricity load waiting for power to come back online. Power goes up only to be overloaded by demand on the network instantly and going down again.
12. Continued oil and natural gas shortage diminished back up fuel storage for power generation
13. Increased competition among fuel transporters to haul coal and oil to all demanding parties, esp. power generators.
14. Lack of back up fuel causes smaller local power generators not be able to come back online
15. Lack of proper emergency communication policy, downing of several mass media channels makes it harder to coordinate electricity load from residential buildings in order to get some power plants back online, when priority is given to commercial operators and those who pay most.
16. A lot of people act in uncoordinated manner and try to solve the situation ad hoc on the fly, as standard emergency and other procedures do not immediately bring desired result
17. Things continue chaotic for a while, until load is removed, backup fuel is deliver or the shortage of main fuels eases.

Now, above is just a one example of chained and causally reinforcing effects.

What is the probability for that? I don't know, but I'd guess it to be fairly low. Of course, there are geographical, national and fuel mix based differences between various places where that kind of situation might happen.

What I can say, that people who plan these are aware of these, but often they don't really know what to do with them.

Everybody's relying on things like SPR and other backup fuel reserves, but the logistics and coordination hasn't really been tested, in the case of multiple downside risks materializing roughly at the same time.

So, do I personally lose sleep over the above type situation? No.

Do I think that they will never happen? No, they might - even if the likelihood is probably very low.

Do I think the the consequences might be bad? Short term and for some actors, possibly yes - very hard to predict for systemic and esp. mid-to-long term effects. Is the situation recoverable: highly likely.

What I do know that such systemic risks cannot be cured or removed overnight.

Even if I had all the capital, knowledge and manpower in the world, it would indeed take a fairly long time to remove the major systemic risks from above scenario. It would mean a lot of rebuilding, redesigning and adding new capacity - not to mention reducing demand. Some of the risk factors (like peaking of oil, crunch on gas, etc) might not be removable at all. From an economic planning point of view, removing all risks is most of the times not worth it.

So, I think it is good to think about these situations, as I currently believe that the likelihood of such risks currently grows as a function of time as we continue doing BAU.

This does not of course mean that you necessarily think differently about this or that I'm some how arguing against you. This is merely a clumsy way to find some middle ground here.

our ability to organize our technical abilities to meet this threat is the biggest unknown.

Very well said and I think this applies to a lot of other systemic risks as well. Our ability is currently perhaps the biggest unknown :)