A sustained increase in price of input of production for a country importing energy is likely to cost push inflation in the market. Firms may pass the increased production costs to consumers in form of increased prices to retain their profit margins. They may also need to reduce production which results in unemployment.

There will be a shift in aggregate supply with higher prices. Consumers that experience a rise in the cost of living may seek to negotiate an increase in wages which results in a wage price upward spiral.

A potential long term policy solution is to find alternative sources of energy to address the supply side constraint. If a country is able to produce some of its own energy in a cost-effective way, it reduces import costs and alleviates some potential pressure on energy prices.

This could be in the form of wind or solar power or nuclear energy. Building the infrastructure to address this constraint is likely to be very costly and takes time to establish. Some measures such as fracking could have environmental issues.

There may also be an incentive to be more energy efficient on part of households and firms encouraged by government support. This may alleviate the pressure on energy prices to some extent.

More energy efficient technologies could also be found and used in the long run. Governments may also use subsidies as a long term solution.