The world is experiencing the first global energy shock in its history, the secretary-general of the World Energy Council said this week, expecting the crisis will have a transformational effect on energy consumption.
“I think this is a first global energy shock, this isn’t the same as the 1970s crisis, oil shock crisis. This is a … consumer driven crisis and the consumer-driven adjustments that are going to come out of this are going to be very significant,” Angela Wilkinson told CNBC.
“If you look at the price of … refined products in many parts of the world, they’re now unaffordable for many of the bottom half of societies,” the official also said. “We’re going to have to see some form of massive reallocation of … money coming out of … this crisis. Consumers are really, really hurting.”
Indeed, the cost-of-living crisis has become a top issue for some of the wealthiest nations in the world. In the UK, millions have been plunged into energy poverty by gas price inflation, which has prompted an upward adjustment of electricity prices.
Across the Channel, the EU is also struggling to keep energy affordable while punishing Russia for its invasion of Ukraine with sanctions that ultimately make energy more expensive.
In the United States, gasoline and diesel prices are running at all-time highs, and legislators are trying to arrest this trend by approving a bill that seeks to prevent what its sponsors have dubbed price-gouging on the part of fuel retailers.
In both the U.S. and the UK, inflation remains at the highest in four decades, and it’s not a lot better in the EU. In the developing world, inflation trends are strong, too.
“The biggest challenge is going to be this new context of affordability and energy justice,” Wilkinson told CNBC. “It’s a big uncertainty and it’s going to require policy innovation but it’s also going to require a new approach to international cooperation.”
By Irina Slav for Oilprice.com
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