How many impacts has the energy dilemma brought to the world?

In recent months, global energy prices have continued to rise sharply.

Against the background that global liquidity is still overflowing, soaring energy prices have further substantially pushed up inflationary pressures in major economies and increased the uncertainty of the recovery of the world economy

The price of multiple types of energy interacts and rises together

Different from several energy crises in history, this round of global energy tensions presents the characteristics of interaction and joint rise in the prices of primary energy sources such as natural gas and secondary energy sources such as electricity

Natural gas prices rose first and rose the most

High natural gas prices have a knock-on effect on the electricity market, pushing up electricity prices

In order to reduce the cost of power generation and ensure power supply, major markets such as the United States, Europe, and Asia have switched to using coal or oil for power generation in large numbers, leading to higher coal and oil prices

Multi-factor resonance exacerbates the energy dilemma

　　The current high energy prices are not due to unilateral imbalances in demand or supply, but due to the resonance of multiple factors

　　First, as the world economy recovers from the epidemic, energy demand has increased substantially

　　At present, global gasoline demand is only 2% lower than the level before the outbreak, and it was more than 10% at the beginning of this year

　　Second, insufficient oil and gas production capacity

　　Take LNG as an example

　　This year, the shortage of natural gas in Europe is particularly serious.

　　In terms of oil production, OPEC and non-OPEC oil-producing countries reached an agreement last year to reduce production by nearly 10 million barrels per day, which is equivalent to 10% of global production.

　　Third, extreme weather occurs frequently around the world

　　Fourth, the energy transition cannot keep up with demand

　　At present, the global primary energy consumption structure is still dominated by traditional fossil energy.

　　The impact and response of the energy crisis

　　Institutions and experts believe that in the context of global liquidity, soaring energy prices have further boosted inflationary pressures in major economies, which not only affects people’s consumption, but also impacts business operations, which in turn increases the uncertainty of the world’s economic recovery.
Certainty
.

　　The International Energy Agency pointed out in the report that the shortage of natural gas and coal in large economies has led to a surge in energy market prices, which may trigger a faster-than-expected rebound in the oil market, which will greatly increase the cost of high-energy-consuming industries, leading to a reduction in industrial activities and a decline in the world economy.
The speed of recovery during the epidemic has slowed
.

　　In Europe, many companies may face the dual impact of rising energy costs and falling consumer spending
.
Rising electricity prices are already affecting the operations of power-intensive industries, and many companies have temporarily reduced the production of ammonia and fertilizers due to the sharp increase in natural gas prices that have led to lower profit margins
.

　　The Office of Natural Gas and Electricity Markets, the UK's energy regulator, recently stated that the recent surge in global natural gas prices has put tremendous financial pressure on suppliers
.
Since the beginning of this year, more than a dozen small energy suppliers have closed down in the UK, including Clean Planet, which provides energy for 235,000 homes, and Colorado Energy, which provides natural gas and electricity for 15,000 homes
.
Clean Planet claims that the company is being squeezed by rising costs and UK energy price caps, which makes its business "unsustainable
.
"

　　In India, economic recovery and increased demand for related energy have led to a shortage of coal.
Domestic coal mining, which accounts for 80% of the country’s supply, has been unable to keep up with demand, and rising international prices have made imports uneconomical
.
Power plants that rely on imported coal have slowed down or even ceased production, and some power plants that rely on domestic coal have begun to experience power outages
.
Despite the efforts of the Indian government to solve the shortage problem, several states still suffer from severe power shortages, affecting residents' lives and industrial production
.

　　The US Energy Information Administration recently issued a report warning that "Americans may pay more this winter to stay warm, especially when the temperature drops sharply
.
" According to the Wall Street Journal, economists at JPMorgan Chase believe that rising energy prices will push up the inflation rate by 0.
4 percentage points in the next few months
.
According to data from the US Bureau of Labor Statistics, the consumer price index rose 0.
4% month-on-month in September and 5.
4% year-on-year, reaching a 13-year high.
The year-on-year increase has exceeded 5% for five consecutive months
.

　　Considering the global energy supply and demand tensions, infrastructure construction cycle and seasonal factors, the rising trend of energy prices is difficult to change in the short term
.
The continued energy shortage has had a greater impact on the world economy.
Many governments are or plan to adjust policies in currency, finance, trade, industry, etc.
to respond to the crisis
.

　　Some experts believe that in the context of intensified inflationary pressures, the central banks of major economies may speed up the tightening of monetary policy beyond expectations
.
This may lead to increased volatility in global capital markets, the tail risk exposure of some emerging economies, and the increased risk of stagflation in some countries
.

　　The International Monetary Fund warned in its latest "World Economic Outlook Report" that the upside risk of global inflation has intensified and there are huge uncertainties in the outlook for inflation
.
If inflation continues to remain high, the Fed and other central banks must prepare contingency plans to raise interest rates in advance to control price increases
.