Contrasting to what might be expected after an economic slowdown due to the COVID-19 pandemic, the world is now creeping into an energy crisis. So what has been happening to cause it and what will be its repercussions? Let's check them out.
What have been some of the effects of the crisis?
The supply of natural gas, coal and other energy sources have failed to meet the demand. In Europe, natural gas prices have soared many times over. The situation in China is such that there have been constant power disruptions due to a shortage of coal supply. In the UK, many of the fuel pumps have been reported as dry and the situation is so grave that the military has been called in to prevent any form of violence that may erupt because of it.
What has caused this crisis?
The primary reason being attributed to the energy crisis has been the return to normalcy following the pandemic as the economic activity comes back on track. The supply, however, has not managed to match the needs yet and this is what, experts believe, has caused the energy crisis. In the UK, specifically, the unavailability of adequate truck drivers who transport fuel to the pumps has been a major driver in their energy problem. Some analysts believe that the crisis is due to the increasing restrictions imposed on conventional energy resources due to a move towards greener energy by major economies.
What will be the result that awaits the world?
Energy supplies will remain on the low side as producers take their own time to meet the increased demands in response to higher prices. The crisis will deepen further if an extreme winter leads to a further soar in the demands. The government's decisions will also play a vital role in how the situation pans out for the people. Controlling the prices may lead to curtailing the incentive possessed by the producers to boost the energy supply.
What does it mean for India?
The reluctance to raise electricity prices in India may lead to leaving no incentive to power producers to raise their output. The fact is that three quarters of the thermal power plants in the country possess less than a week's supply of coal in their stock in a time of rising demand. The desirable outcome of realising greener energy may also hit a stumbling block if people realise the economic cost of meeting emission targets. There could be widespread backlash against renewable energy as a result.
