In fact, a greater supply of clean energy sources and technologies would have protected consumers and mitigated some of the upward pressure on fuel prices. Even in advanced economies, rising prices have impacted vulnerable households and caused significant economic, social and political strains.Ĭlimate policies have been blamed in some quarters for contributing to the recent run-up in energy prices, but there is no evidence. In emerging and developing economies, where the share of household budgets spent on energy and food is already large, higher energy bills have increased extreme poverty and set back progress towards achieving universal and affordable energy access. Some gas-intensive manufacturing plants in Europe have curtailed output because they can’t afford to keep operating, while in China some have simply had their power supply cut. That’s why we can refer to this as the first truly global energy crisis. The entire word economy is much more interlinked than it was 50 years ago, magnifying the impact. Today’s crisis involves all fossil fuels, while the 1970s price shocks were largely limited to oil at a time when the global economy was much more dependent on oil, and less dependent on gas.

While today’s energy crisis shares some parallels with the oil shocks of the 1970s, there are important differences. Europe, whose gas supply is uniquely vulnerable because of its historic reliance on Russia, could face gas rationing this winter, while many emerging economies are seeing sharply higher energy import bills and fuel shortages. Higher energy prices have contributed to painfully high inflation, pushed families into poverty, forced some factories to curtail output or even shut down, and slowed economic growth to the point that some countries are heading towards severe recession. Oil prices hit their highest level since 2008. The price of natural gas reached record highs, and as a result so did electricity in some markets. But the situation escalated dramatically into a full-blown global energy crisis following Russia’s invasion of Ukraine in February 2022. Energy markets began to tighten in 2021 because of a variety of factors, including the extraordinarily rapid economic rebound following the pandemic.

Biggest modern tank in the world