The California electricity crisis, also known as the Western U.S. Energy Crisis of 2000 and 2001 was a situation in which California had a shortage of electricity caused by market manipulations and illegal shutdowns of pipelines by Texas energy consortiums. The state suffered from multiple large-scale blackouts, one of the state's largest energy companies collapsed, and the economic fall-out greatly harmed Governor Gray Davis's standing.

Drought, delays in approval of new power plants, and market manipulation decreased supply. This caused 800% increase in wholesale prices from April 2000 to December 2000. In addition, rolling blackouts adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers.

California had an installed generating capacity of 45GW. At the time of the blackouts, demand was 28GW. A demand supply gap was created by energy companies, mainly Enron, to create an artificial shortage. Energy traders took power plants offline for maintenance in days of peak demand to increase the price. Traders were thus able to sell power at premium prices, sometimes up to a factor of 20 times its normal value. Because the state government had a cap on retail electricity charges, this market manipulation squeezed the industry's revenue margins, causing the bankruptcy of Pacific Gas and Electric Company (PG&E) and near bankruptcy of Southern California Edison in early 2001.

California (pronounced ⁱ/kælɨˈfɔrnjə/) is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third most extensive (after Alaska and Texas). It is home to the nation's second- and sixth-largest census statistical areas (Los Angeles Metropolitan Area and San Francisco Bay Area), and eight of the nation's fifty most populated cities (Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach and Oakland). The capital city is Sacramento.

California's diverse geography ranges from the Pacific Coast in the west, to the Sierra Nevada mountains in the east – from the Redwood–Douglas-fir forests of the northwest, to the Mojave Desert areas in the southeast. The center of the state is dominated by Central Valley, a major agricultural area. California contains both the highest and lowest points in the contiguous United States (Mount Whitney and Death Valley), and has the third-longest coastline of all states (after Alaska and Florida). Earthquakes are a common occurrence due to the state's location along the Pacific Ring of Fire: about 37,000 are recorded annually.

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles. There has been an enormous increase in the global demand for energy in recent years as a result of industrial development and population growth. Supply of energy is, therefore, far less than the actual demand.

Market failure is possible when monopoly manipulation of markets occurs. A crisis can develop due to industrial actions like union organized strikes and government embargoes. The cause may be over-consumption, aging infrastructure, choke point disruption or bottlenecks at oil refineries and port facilities that restrict fuel supply. An emergency may emerge during unusually cold winters due to increased consumption of energy.

Large fluctuations and manipulations in future derivatives can have a substantial impact on price. Large investment banks control 80% of oil derivatives as of May 2012, compared to 30% only a decade ago. Kuwaiti Oil Minister Minister Hani Hussein stated that "Under the supply and demand theory, oil prices today are not justified," in an interview with Upstream.