What’s Happening With the Gas and Oil Crisis?
4 min readOct 2, 2021
- Countries around the world are now starting to “reopen” their economies as a “post-pandemic” recovery.
- However, now the demand for energy (gas and oil) has soared above the supply most countries have. Those that export gas and oil, such as Russia and Qatar, have moved to keep more of their supplies at home, as they are also experiencing very high demand.
- This means that those who rely on imports are attempting to outbid each other for those limited supplies. With a decrease in supply, there will have to be a higher price for consumers:
- To add, renewables like solar power are not developed enough to power countries through the short supply of fossil fuel energy, especially as winter comes and there will be overall less sunlight in the Northern Hemisphere. Wind power has reduced its own output due to calmer weather.
- The situation worsens when countries have to both provide enough energy for its population without being so dependent on limited non-renewable energies, and without adding to global pollution levels.
- The Industrial Energy Consumers of America has requested the reduction of U.S. exports until storage levels return to its normal, possible exacerbating energy shortages abroad.
- The surge in prices of natural gas has also made oil a relatively cheaper alternative, for being a substitute good, which in turn has increased demand for oil. However, recently oil supplies around the world have taken a hit as a result of hurricanes Ida and Nicholas, which passed through the Gulf of Mexico and damaged US oil infrastructure, so not so much cheaper anymore.
What are the Worst Effects of this?
- European governments are now warning of potential blackouts and a forced shutdown of some factories.
- Two of the UK’s big industrial fertiliser plants will have to shut down as the production depends on gas, which threatens an increase in costs of production for farmers. Abattoirs are also short of the gas they need to stun animals, adding to their costs and supply. If we look at the global food market, higher prices for farmers and butchers means higher prices on food for consumers, therefore adding to the global food inflation:
- Moreover, there have been shutdowns of petrol stations, which had caused a commotion of drivers to want to “stock up” their own fuel due to misinformation and herd behaviour, which had only ramped up the demand for fossil fuels and a surge in prices:
- Likely to only get worse as winter comes, and demand for energy from the ordinary person only soars
The Economic Implications
- Our national and global economy are only starting to feel the danger of being so dependent on our finite sources of energy in a world where our infinite wants are ever so apparent – The UK uses 3x as much energy as they did 50 years ago.
- Mike Berners-Lee argues that we could meet all our global energy needs right now by covering 0.1% of the world’s land in solar panels. This, however, requires figuring out storage and transmission, which so far we have not done so. And the more energy we have, the more we will want as has been proven, so our energy use will continue to expand about 2.4% per year which means that in about 3 centuries we will need every inch of land mass we have for solar panels.
- Of course, this will not happen in practise as investment into innovation will lead to new and improved solar panels (and other sources of renewable energies), reducing costs and needing much less. Nevertheless, this does demonstrate how the rate of energy usage is increasing a lot more than the rate of transition from finites to renewables at a highly unsustainable rate.
- It can be argued that instead of carrying on the slow and never-ending transitioning process of divesting from shares in oil/gas and focussing on ESG, the focus to cleaner energy should be on making current extracting cleaner and more efficient, whilst waiting for the challenges of reaching a completely green economy to be solved.
- Overall, this shows the inevitable long-term reliance we have on fossil fuels, and the probable need to exhaust it now for an actually effective transition to a global sustainable green economy
