yergin3_Christopher FurlongGetty Images_oil refiner Christopher Furlong/Getty Images

The Energy Crisis Will Deepen

Today’s global energy crisis could turn out to be even worse than what the world experienced in the 1970s. Much will depend on more informed collaboration between governments and industry leaders, with policymakers properly understanding and managing the energy flows on which modern economies depend.

WASHINGTON, DC – Is today’s energy crisis as serious as similar previous ones – particularly the 1970s oil shocks? That question is being asked around the world, with consumers hit by high prices, businesses worried about energy supplies, political leaders and central bankers struggling with inflation, and countries confronting balance-of-payments pressures.

So, yes, this energy crisis is as serious. In fact, today’s crisis is potentially worse. In the 1970s, only oil was involved, whereas this crisis encompasses natural gas, coal, and even the nuclear-fuel cycle. In addition to stoking inflation, today’s crisis is transforming a previously global market into one that is fragmented and more vulnerable to disruption, crimping economic growth. And, together with the geopolitical crisis arising from the war in Ukraine, it is further deepening the world’s great-power rivalries.

Today’s energy crisis did not begin with Russia’s invasion of Ukraine, but rather last year when energy demand surged as the world emerged from the COVID-19 pandemic. That is when China ran short of coal and prices shot up. The global market for liquefied natural gas (LNG) then tightened, with prices skyrocketing, and oil prices rose as well.

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