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Writer's pictureJim Parks, CFP, AIF

Low Energy?

Currently, there is a mismatch in energy supply and energy demand in many parts of the world. In some places, it is creating issues that countries haven’t experienced in some time. For instance:

  • In Europe, the cost to heat the average home rose about fivefold from September 2020 to September 2021, according to The Economist.

  • In India, where about 70 percent of electricity is generated by burning coal, coal supplies are running low, according to Arunoday Mukharji of BBC.

  • In China, rolling blackouts have implemented to address an electricity shortage, reported Peter Hoskins of BBC.

  • In Lebanon, power plants went offline over the weekend and the country is expected to be without power for several days, reported Laila Bassam of Reuters.

  • In the U.S., oil prices are at a seven-year high, and the price of gasoline was above $3 a gallon. In some places, it was above $5 a gallon, reported Pippa Stevens of CNBC.

There are many reasons for the current energy shortage, reported Will Englund of The Washington Post. “The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, a turn for the worse in relations between China and Australia that led Beijing to stop importing coal from Down Under, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines.”

The energy shortage may be more challenging to overcome than some other types of shortages, opined The Economist, because investment in fossil fuels has been declining as the world moves toward lower emissions and greener energy sources. “The long-term challenge is to smooth out volatility as the switch to renewables continues.”

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