Due to demand exceeding supply, gas and electricity prices in Europe rose to record highs last week.
In the UK, a series of petrol stations have hung signs to halt service, due to a sharp increase in fuel wholesale prices as well as a lack of truckers to move gasoline from refineries to retailers, causing transportation activities to stall. As a workaround, the British government had to send soldiers to participate in driving fuel tankers to gas stations.
In response to the energy crisis, the Eurogroup of euro zone finance ministers met to discuss the possibility of signing a joint purchase contract for gas.
However, this effort has not received widespread support. The Belgian government said that the energy bill was under national jurisdiction, so Belgium would deal with the crisis on its own. France and Spain have criticized the rules for operating electricity markets in Europe.
In Asia, the predicament is similar. China is facing widespread power shortages, which are being blamed on a sudden increase in energy demand. Due to a lack of electricity, manufacturing activity in China in September fell for the first time since early 2021.
China isn't the only major asian economy facing an energy crisis. India may be staring at electricity shortages in the coming months because coal stocks at most of its power plants have dropped to critically low levels. Coal accounts for almost 75% of the country's electricity generation.
Oil prices jumped on October 5, with US crude hitting its highest cost since 2014.
Despite pressure from the US to increase production, the Organisation of the Petroleum Exporting Countries Plus (OPEC+) decided to keep the plan to increase by 400,000 barrels per day (bpd) of oil to the market, at least until next November, with market stability reasons.
Higher oil prices are beneficial for producers, as they increase the volume and revenue of oil exports, but it can hold back the economic recovery after the pandemic.
Despite giving different time frames for the world to overcome the problem of energy supply, most experts share that COVID-19 is still the biggest obstacle to the economic recovery process. There is even an opinion that global trade cannot return to normal if people are still dying from the disease.
COVID-19 continues to seriously impact all activities of the world. The energy crisis further demonstrates the importance of tight links in the supply chain. No single country can solve the crisis without equal coordination with all parties in today's deeply globalised environment.
