Energy is increasingly scarce and expensive

This happened at a time when countries were accelerating their economic recovery after a long period of closure due to the COVID-19 epidemic.

Although the cold winter has passed, Germans still store firewood to keep warm. “This firewood is for next winter’s winter. This winter has passed, but due to circumstances, due to the conflict in Ukraine, I still have to stay far away when the gas is suddenly cut off or there is a shortage. energy“, Ms. Susanne Gasden, a German, shared.

This is the common sentiment of many people after Germany activated its gas emergency plan due to concerns that supply would be disrupted if Western countries refused to pay for gas contracts with Russia in rubles.

Prices for consumer electricity and fossil fuels in Germany are also up to 40% higher than the pre-COVID-19 average, leaving half of the municipalities in trouble. Energy is scarce and expensive, a situation that is happening not only in Germany, but also on all continents.

Nord Stream 2 gas pipeline in Leningrad region, Russia. (Photo: TASS)

“We are in the middle of a global energy crisis. In the 70s it was the oil crisis, now it’s the oil crisis, the natural gas crisis and the coal crisis. Energy security. is a priority for many, if not all, governments,” said Fatih Birol, Executive Director of the International Energy Agency (IEA).

Many factors led to this crisis. After a period of stagnation due to the blockade orders to prevent the COVID-19 epidemic, the supply of oil, gas and coal has not kept pace with the global economic recovery.

Meanwhile, many countries have decided to reduce investment in traditional fuels to achieve the goal of carbon neutrality, when renewable fuels cannot meet energy consumption needs.

The recent Russian-Ukrainian conflict has exacerbated the energy crisis.

Russia is the world’s leading exporter of natural gas and the second largest exporter of crude oil in the world, after Saudi Arabia.

JPMorgan estimates that if the Russia-West confrontation and mutual sanctions continue, 66% of Russia’s oil will have difficulty finding buyers and crude oil prices could reach $185 by the end of the year. this year. While the current price is already a big challenge.

“Oil prices at $110/bbl are posing a challenge for the whole world. The world’s leading economies face the highest inflation rates in 50 years. Living standards in some countries are severely affected. The biggest drop since World War II,” said Hardeep Singh Pur, India’s Minister of Petroleum and Natural Gas.

However, things don’t just stop there.

“One of the reasons why energy prices are so high and energy security in developing countries is threatened is because of the heat wave as a result of climate change,” said Fatih Birol, Director Executive of the International Energy Agency (IEA), emphasis.

Next summer is forecasted to be as hot as a pan of fire. Much of the Northern Hemisphere will use electricity at a very high rate, especially in South and Southeast Asia due to the habit of using air conditioning. As a result, the grid was overloaded and many places lost power.

Power outages, high input energy prices will affect production. Rising energy prices also increase the cost of living, leading to a drop in spending. This will be a huge shock to the global economy.

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