Why are we in a global energy crisis?
Since August 2021, there has been a sharp increase in global energy prices.
Paired with the increased international demand for energy found across nations emerging from covid-19 lockdowns, and the subsequent conflict of Russia’s invasion of Ukraine, concerning global conditions have imposed difficult terms on our energy supply—leading to what we have suitably been referring to as “the energy crisis.”
What does this mean for you, the consumer?
Well, it means that there may be fuel shortages and that there will be increased energy prices. Resultantly, there will be an increase in the cost of living, and for some, these factors bring an increased risk of fuel poverty. We understand that this can be concerning and are here to help, if you want to learn more about the support that is available to you, click here.
Understandably, these changes can seem overwhelming, and it makes sense that many people want to know more about why their lives are being affected by these changes, making, what seems like an invisible chain of energy supply and demand, a little clearer and less confusing. The majority (70%) of energy prices are down to the wholesale costs, meaning the amount your provider pays for the gas and electricity that they supply to you is down to the control of global energy markets. Click here to find out more.
So, let’s break down why the markets look this way…
Russia supplies around 12% of the world’s gas. In 2020, Russia provided 45% of Europe’s natural gas import demand, 70% of these exports are transported to Europe by pipeline, whereby Russian gas travels through Ukraine. Since Russian President Vladimir Putin ordered the invasion of Ukraine last February, the rate of Russian gas consumed by European countries has drastically reduced, dropping to 9%.
As a response to the conflict, nations are seeking to limit their financial input to Russia. For example, the UK imposed sanctions where we no longer import Russian gas and plan to “phase out Russian oil by the end of 2022.”
As a result, Russia retaliated by shutting down the delivery of gas to Europe through the Nord Stream 1 pipeline, a network of offshore natural gas pipelines, affecting the supply of gas.
Price instabilities can be expected to continue until there is a stable and long-term supply of energy, which as we head into the Winter months, becomes increasingly difficult with increased demands.
A greener and more reliable future
While these difficult times are worrying for all of us, there are things we can do. The global energy crisis is an opportunity for us to reduce energy use by turning towards a greener, cleaner and more secure future.
Switching from fossil fuels to green, renewable energy presents a beacon of hope, showing that we can tackle climate change and maintain an affordable and reliable source of energy.
At NEP, we advocate for green energy systems and efficiency measures to tackle fuel poverty and climate change. We may be able to help you gain more control over your energy intake and energy bills.
For more information about NEP’s services, click here.
For further help, call us on 0115 985 3009 and we can give you a helping hand.