Major raw materials such as coal, oil and natural gas soared one after another
Intensifying power shortages in China and Japan… Inflation rises dominoes around the world
There is an energy crisis going on around the world.
This is because the economy is rapidly recovering as major countries with large economies have switched to the ‘with Corona’ policy one after another, and the carbon-neutral policies pursued by these countries and the trade dispute between China and Australia overlapped.
In particular, ahead of the winter when energy demand is high, the prices of major raw materials such as coal, oil, and natural gas soar at once, raising concerns that a large-scale blackout or a domino effect of price hikes such as those currently occurring in China may spread.
◇ Coal, oil and natural gas prices soared by 100-300%
According to Reuters and Bloomberg News, the price of Brent crude oil, which was in the low $40 range in October last year, soared to $81.47 per barrel on the 4th (local time).
It is the first time in about three years since 2018 that Brent oil crossed $80 a barrel.
During the same period, the price of coal soared more than 300% from $57.7 per ton to $246 per ton, and the natural gas transaction price more than doubled from $2.62 per 1 million Btu to $5.83 per ton.
The main energy prices, which had plummeted as the economy froze due to the novel coronavirus infection (COVID-19), which hit the world since early last year, rebounded as the economic recovery showed signs of full-fledged.
Carbon-neutral policies promoted by major countries such as the United States, the European Union (EU) and China also had a significant impact on this.
Paradoxically, the carbon-neutral policy to reduce carbon dioxide emissions in response to climate change led to severe electricity shortages in countries that rely heavily on fossil fuels such as China and India, as well as a surge in the prices of major fossil fuels such as coal and oil.
In the case of renewable energy such as wind power and solar power, the proportion of power generation in most countries is not large and energy efficiency is low, which is still insufficient to replace fossil fuels.
In the case of China, which President Xi Jinping has declared to achieve carbon neutrality by 2060, about 68% of its total electricity depends on thermal power generation.
Wind power, solar power, and nuclear power account for only 3 to 6 percent.
Analysts say that China, ahead of the Beijing Winter Olympics in February next year, faced a massive power shortage while trying to rapidly push its carbon-neutral policy for various political purposes.
China has sharply increased its imports of natural gas, an alternative fuel, this year as the import of Australian coal, a major coal importer, was blocked due to emotional conflict with Australia over the investigation into the origin of the coronavirus.
As of the end of 2020, the ranking of liquefied natural gas (LNG) imports was in the order of Japan, China, and South Korea, but in the first half of this year, China overtook Japan to rank first.
As such, major countries, including China, which are pursuing carbon-neutral policies, have increased their imports of LNG, which is recognized as a relatively ‘clean fuel’, and LNG prices have skyrocketed.
Euronews reported that as the competition for natural gas in East Asia and Europe intensified recently, natural gas prices in Europe soared to an all-time high, raising concerns that European consumers would accept expensive electricity bills this winter.
◇ From fear of blackout to fear of inflation… “The cold winter is coming”
China’s power shortage, which began in earnest in September this year, is poised to spread to India, another economic powerhouse with a similar situation.
According to the Financial Times (FT), India’s Ministry of Electricity said on the 1st that 135 thermal power plants were facing a serious electricity crisis with only four days’ worth of coal left.
Coal-fired power plants account for 66% of India’s total electricity production.
In particular, India has had to stop importing coal as international coal prices have risen sharply in recent months due to a sharp increase in imports from China and Europe, which has exacerbated the crisis.
The power shortage facing India is likely to lead to large-scale blackouts and rising electricity rates, the FT predicted.
Orodeep Nadi, an economist at Nomura Securities India, said, “India’s electricity sector is facing a kind of ‘perfect storm’.” “Demand is high, but there is not enough supply of Indian coal, nor is there a stockpile of imported coal.” said
The situation in Europe, which relies heavily on imports from Russia and other countries, for natural gas, the main fuel for power generation, is also serious.
According to Reuters, natural gas prices in Europe soared about 280% this year.
The rate of increase is steeper than in the United States, which rose by about 100%.
Energy prices soaring to an all-time high have fueled various inflationary concerns, raising concerns about inflation.
In Germany, Europe’s largest economy, some workers went on strike demanding a wage increase last month as inflation hit 4.1%, the highest in 29 years.
Many economists expect inflation in the eurozone to reach 4% by the end of the year, doubling the European Central Bank’s (ECB) target.
Forbes on the 3rd (local time) ‘Winter is Coming: Can Energy Disaster Be Averted?’ Citing the Bank of America (BoA) in the sub-article, he pointed out that crude oil prices could exceed $100 a barrel this winter, which could lead to a global economic crisis.
Forbes said that the cause of the energy crisis in Western Europe this year, in particular, was the premature shutdown of hundreds of coal-fired and gas-fired power plants to increase dependence on wind and solar power.
/yunhap news
