Explainer: Global energy shortage or a coincidence of regional crises?

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29 September (Businesshala) – Gasoline stations in Britain are drying up. The cost of electricity is rising in the EU ahead of winter. Forced restrictions on the use of energy in China. and rising prices of oil, natural gas and coal.

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You would be forgiven if these events led you to believe that the world was suddenly plagued by a lack of global energy. But you would also be mostly wrong.

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Although there are reductions in supply to consumers and businesses in each of these areas, disruptions are less common than you might think.

What unites them is the broad-based rebound in energy demand during the depths of the coronavirus pandemic that has propelled oil, gas and coal prices; supply restrictions issued by the oil cartel OPEC; and global transport bottlenecks that have complex fuel delivery.

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But the list of what sets them apart is long, indicating that disruptions may have more to do with local policy choices and regional dynamics than a general reduction in global energy supply.

Oil prices broke $80 a barrel this week for the first time in three years, with natural gas and coal also hitting multi-year peaks. The Organization of the Petroleum Exporting Countries and Allied Countries will meet next week to decide whether to use their surplus production capacity to help bring down prices.

Here is a brief summary of what is disrupting energy markets in the UK, Europe and China:

lack of china

China’s government has begun to power energy-hungry businesses because of the lack of coal supplies. As Beijing sets electricity prices, coal plants battling high coal costs are unable to operate economically and are shutting down.

Goldman Sachs estimated that 44% of China’s industrial activity has been affected by a power shortage, which could affect its GDP.

The China Electricity Council, which represents electricity suppliers, said on Monday that coal-fired power companies are now “expanding their procurement channels at any cost” to guarantee winter heat and electricity supply.

But coal traders have said it may be easier to find new import sources, with Russia focusing on meeting Europe’s electricity needs, rain is hampering imports from Indonesia, and trucking bottlenecks have prevented imports from Mongolia. obstructed.

europe electricity bill

The cost of keeping lights in Spain has tripled in recent weeks, reflecting a widespread increase in electricity bills across the European Union. Rising electricity costs have raised fears of a tough winter ahead as homes demand heat and consumption is pushed to seasonal peaks.

Rising costs in Europe are attributed to a confluence of local factors, including low natural gas reserves and overseas shipments, low output from the region’s windmills and solar farms, and maintenance work that has kept nuclear generators and other plants offline.

Times are tough as demand is only expected to pick up in the coming weeks and months, but the return of power plants from maintenance and most recently the start of the Nord Stream 2 gas pipeline from Russia to Germany could eventually ease markets.

Meanwhile, Spain, Italy, Greece, Britain and others are planning national measures, ranging from subsidies to price caps, aimed at protecting citizens from rising costs as economies recover from the COVID-19 pandemic.

UK petrol stations are running dry

Panic-buying by motorists has left fuel pumps in major UK cities dry in one of the worst energy disruptions the country has faced in decades. Fighting broke out at filling stations after the government urged them to remain calm.

But the problem plaguing Britain isn’t a lack of gasoline, it’s a lack of truckers to deliver fuel from refineries to retailers – one of the strange side effects of Britain’s exit from the European Union, and the hangover from deferred truck certification. and training during the pandemic.

Joint? Prime Minister Boris Johnson’s government is issuing temporary visas to thousands of foreign truck drivers to bring fuel to market, has put the military on standby to help, and hopes to restore order at the pumps ahead of the holidays.

Writing by Richard Waldmanis Editing by Marguerita Choy

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