- Since the summer of 2020 the price of natural gas has increased upto five-folds, the reason for that is Russia’s invasion of Ukraine according to IEA.
- The price of LNG has doubled over in nigeria, 100m may no longer be able to afford LNG for cooking might even shift to firewood.
- The IEA said that renewables could be the key to solving the world’s energy shortage in coming years.
We are in the midst of the first global energy crisis, according to the International Energy Agency. It says that because of it, tens of millions of people across the world may lose access to electricity, or fuel for their homes, reported by BBC.
The price of natural gas has increased almost five-fold since the summer of 2020. It has been selling on international markets for the equivalent of $250 per barrel of oil.
The International Energy Authority (IEA) says Russia’s invasion of Ukraine in February is the main factor behind this.
Russia has cut natural gas supplies to countries in the European Union by over 80% because of their opposition to the invasion.
Which has led to a bidding war for supplies of gas across the world.
The price of natural gas was rising even before the outbreak of the war. As countries emerged from Covid lockdowns, industries started using much more of it.
Coal prices have also risen sharply – tripling over the past year. That’s because with the shortage of gas, many power stations around the world have switched to using coal instead.
Oil, the third major fossil fuel energy sources, has also risen in price as EU members, along with countries such as the UK and US, have banned purchases of Russian oil.
This has created further oil shortages, and at its peak, Brent crude reached $125 a barrel.
The price is now at levels of between $90 and $95 a barrel.
The IEA says this year’s energy crisis is worse than the oil price shocks of the 1970s because it involves not just oil but natural gas and coal, as well.
It is also affecting the lives of many more people around the world – and especially in developing countries.
High fuel prices have increased the cost of producing electricity, and the prices that consumers pay for it.
The IEA says that in recent years, hundreds of millions more people around the world have been able to afford electricity supplies for their homes.
But because of rising prices, it says, 75 million people may not be able to afford their electricity supplies any more.
Hundreds of millions of people in developing countries also use canisters of fuel such as liquefied petroleum gas (LPG) for cooking at home.
In Nigeria, the price of LPG has almost doubled over the past year.
The IEA says 100m people may no longer be able to afford using LPG for their cooking and may have to use firewood instead.
This creates a health problem because wood smoke damages the lungs.
Producers to blame
Russia is widely blamed for causing the energy crisis by holding back gas exports to EU countries.
However, the 22 oil producing countries in the Opec+ group (which also includes Russia) have also played a part.
In 2020, Opec+ countries cut oil production by more than nine million barrels per day because of falling demand during the pandemic.
When the pandemic ended and the demand for oil rose, OPEC+ countries only increased their output slightly.
This created international shortages, pushing up petrol prices around the world.
At the start of October, OPEC+ cut output again, by two million barrels a day.
Some producer countries have responded to the world energy crisis by increasing their output of fossil fuels.
In the US, companies are expected to increase natural gas production to new record levels in 2022, and again in 2023. Much of this will be sold to EU countries as liquefied natural gas.
However, Europe may have to endure a tough upcoming winter, with continued high gas prices, before these new LNG supplies arrive.
The IEA expects renewables to be key in solving the world’s energy shortages over the next few years.
It says that by 2030, companies around the world are expected to be investing $2 trillion dollars a year in clean energy.
It says by this time, the US could be producing two-and-a-half-times the amount of solar energy and wind energy that it produces now.
China and India are both expected to ramp up their clean energy production.
By 2030, the IEA expects India to near its goal of producing two-thirds of its electricity from renewable sources.
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