Russia exacerbated the global energy crisis

The year Russia exacerbated the global energy crisis:

December 13: - For the energy industry, 2022 will be remembered as the year the global energy crisis escalated with the Russian invasion of Ukraine.

The aggression and subsequent Western sanctions have increased pressure on already depleted oil and gas supplies in the wake of the pandemic-induced rapid economic recovery.

The world's leading energy companies hastily pulled out of Russia and wrote off tens of billions of dollars in assets. European countries struggled to keep the fires from going out, and their inhabitants did not freeze to death.

Natural gas prices hit multi-year highs and oil prices soared close to $140 a barrel, near historic highs, fueling a post-pandemic inflationary cycle that has triggered a cost-of-living crisis in many countries.

The aggression and subsequent Western sanctions broke supply relations that had existed for decades.

The world's largest economies have struggled to find energy sources, using whatever they can find to keep the light going. The government has accelerated the deployment of solar and wind energy and pushed for coal purchases. Climate change goals have taken a back seat.

Governments have spent billions of dollars to support big utilities like Germany's Uniper. South Africa experienced the worst power outage in history. Sri Lanka, which lacks foreign exchange reserves, is running out of fuel.

Why is it important: The Russian invasion of Ukraine has forced European countries to reconsider their relationship with the country, which has long supplied the continent with natural gas.

Since then, Western countries have started discussing and starting to cap Russian oil prices, while Europe is discussing gas price caps and investing more in liquefied natural gas (LNG) to meet energy demand.

“We are seeing the end of a successful 50-year gas partnership between Russia and Europe,” said Michael Stoppard, Global Gas Analyst and Special Advisor at S&P Global Commodity Insights. You will suffer from this problem until."

This dichotomy is evident in many countries. Poland is the fastest-growing market in Europe in terms of heat pump additions. At the same time, regulations to curb smog have been put on hold, and residents are increasingly burning all that can be used to heat their homes, including noxious lignite or garbage. In Kłodzko, a city of 28,000 in southwestern Poland, people are collecting garbage for fuel, Mayor Michal Piszko said.

What does this mean for 2023?

The confusion isn't over. Major developed countries are also preparing for supply shortages in 2023 and beyond.

US and European governments have moved openly to support "friend sharing" of strategic supplies to their allies despite likely rising costs, and have stepped up the use of tax and aid packages to developing nuclear, solar, wind and hydrogen. I did. resource. Their actions are not only a concrete response to Russia but also a response to China by developing resources to offset China's dominance in solar panel production and battery base material extraction.

US and European governments openly supported "friend sharing" of strategic supplies to allies, despite likely rising costs, and stepped up the use of tax and aid packages for nuclear, solar, wind and energy development. . hydrogen energy. I did. resource. Their actions are not only a concrete response to Russia but also a response to China developing resources to offset China's dominance in solar panels and battery materials.

As the year draws to a close, natural gas and heating fuel costs decrease as economic activity declines. However, people are still struggling and may continue to do so for a while as limited supply creates new price shocks.

“I only turned on the heat in the room I was in and only turned it on for an hour. Then I put on my jumper, hat, and coat and sit down,” says Ruth Johann, an unemployed woman from Coventry, England, who can't afford to heat her entire house in the winter.