Explanator: Global energy shortage or coincidence of regional crises?

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October 1 (Reuters) – UK gas stations are drying up, soaring electricity costs in the European Union ahead of winter, restrictions on energy use in China and rising fuel prices. petroleum, natural gas and coal.

You could be forgiven for thinking that the world has suddenly been hit with energy shortage, but you would be mostly wrong.

While the pressures on consumers and businesses are acute, the disruptions have less in common than you might think.

Uniting Them is a rebound in energy demand from lows hit deep in the coronavirus crisis that has raised oil, gas and coal prices, ongoing supply restrictions by the oil cartel of OPEC and global transportation bottlenecks complicating fuel distribution.

But the list of what separates them is longer, reflecting that disruptions may have more to do with local political choices and regional dynamics than a global supply shortage.

Oil prices crossed $ 80 a barrel this week for the first time in three years, with natural gas and coal also hitting multi-year highs.

The Organization of the Petroleum Exporting Countries and allies will meet next week to decide whether to free up slack production capacity to help bring prices under control.

Here is a summary of what is disrupting the energy markets:

CRUNCH OF CHINA

Beijing has started rationing electricity to energy-hungry companies amid a coal shortage triggered by tightened safety checks at Chinese mines, which have caused production to drop below levels of a year ago for a long time. much of the first semester.

The decline in coal production has in turn fueled a sharp rise in local thermal coal prices, which have hit successive records this year and are up more than 80% since the start of the year.

Because Beijing sets electricity prices, coal-fired power plants have not been able to operate economically with such high coal costs and are in the process of shutting down. Read more

Goldman Sachs has estimated that up to 44% of China’s industrial activity has been affected by power shortages.

The China Electricity Council, which represents electricity providers, said Monday that coal-fired power companies are “now expanding their supply channels at all costs” to ensure heat and power supplies in winter.

But coal traders said finding new sources of imports might be easier said than done, with Russia focusing on Europe’s energy needs, rains disrupting Indonesia’s production and constraints trucking hampering imports from Mongolia.

EUROPE’S ELECTRICITY BILLS

The price of keeping the lights on in Spain has tripled, reflecting a larger increase in electricity bills across the EU in recent weeks. Soaring electricity costs have raised fears of a difficult winter ahead as households demand heat and push consumption to a seasonal peak. Read more

The reason for rising costs in Europe is a confluence of local factors, ranging from low natural gas inventories and overseas shipments, to low output from wind turbines and solar farms in the region, and to maintenance work. that took nuclear generators and other power plants offline.

The timing is difficult as demand is expected to increase in the coming months, but the return of power plants to maintenance and the start-up of the recently completed Nord Stream 2 pipeline from Russia to Germany could eventually ease markets.

Meanwhile, Spain, Italy, Greece, Britain and others are planning national measures, ranging from subsidies to price caps, to protect citizens from rising costs as economies shrink. are recovering from the COVID-19 pandemic.

UK GAS STATIONS RUN DRY

Panic buying by motorists has left fuel pumps running dry in major cities in one of the worst energy disruptions Britain has faced in decades. Fighting broke out at gas stations as the government called for calm.

But the problem isn’t the lack of gasoline, it’s the lack of truckers to get it from refineries to retailers – one of the weird side effects of Britain’s exit from the EU and a hangover from postponing certification and training of truckers during the pandemic.

The fix? Prime Minister Boris Johnson’s government has issued temporary visas to thousands of foreign truck drivers to bring fuel to market, has put the military on hold to help and hopes to restore order at the pumps before the holidays.

Written by Richard Valdmanis, edited by Marguerita Choy and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.


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