Chipster Crisis
In spring 2020, the Corona pandemic caused a sell-off in global energy markets. An oversupply met a fragile demand situation and led in part to severe disruptions on the energy market. Almost 18 months later, the situation on the energy market couldn’t be more different. Since the beginning of the year, energy prices have increased dramatically. The price of oil has risen by over 70%, gas by 130% and coal by as much as 180%. These developments are now being felt by private consumers as well. Whether it is fuel at the gas station, the heating bill or the electricity bill, the increased energy prices are also reaching end-consumers around the world.
But the increased energy prices also create a risk for other areas of life. For example, high gas prices are causing fertiliser producers to reduce production or increase prices, which in turn affects the food industry. Especially in developing countries, significantly higher fertiliser prices could lead to food shortages and significantly higher prices in the coming months
But why have energy prices risen so sharply worldwide? The list of factors that have led to high energy prices is long. The economic recovery, and with it the demand for energy, has been well above expectations and faced limited supply. Droughts in Latin America, which led to low hydropower output, floods in Asia, which had a negative impact on coal production, accidents and postponed repairs also had a negative effect on the supply. While on the other side, a cold summer in Europe and a heat wave in the US resulted in significantly higher than usual energy demand.
The continued discipline of OPEC and Russia with regard to oil and gas production also has an impact on the tight supply situation. All of this has resulted in inventories being well below historical averages and the market reacting nervously to news. Even though many of the influencing factors should normalise in the coming months, the impact of rising costs will be felt in many areas of the economy in the medium term.