There’s a worldwide shortage of fossil fuels
At the moment, the United Kingdom is dealing with an energy crisis. It has a shortage of petroleum and diesel fuel - and gas prices have gone through the roof because there is not enough gas. Things are so bad that they have had to recommission a mothballed coal-fired power station.
Apart from the shortage of fossil fuels, the electricity grid has been stressed because there is no wind, so the offshore wind farms are inoperative. There is not enough electricity to go around and some industry has had to shut down in order to keep the lights on in houses.
Unfortunately, former Prime Minister Theresa May imposed a cap on the retail price of electricity so while the wholesale price has gone up 250 per cent in the last six months, the retail price has been held down. As a result, a large number of power retailers have gone out of business. This has left consumers scrambling to find new suppliers in a situation where every new customer is costing the retailer money.
Prime Minister Boris Johnson has downplayed the problem. He has claimed that it is no more than everyone putting the kettle on at the end of a TV show. He says the problem is temporary, and it will be fixed when the wind starts to blow. This is not true.
There is a worldwide shortage of gas at the moment because demand has escalated as countries come out of the Covid pandemic shutdowns.
In the EU, there is a price crunch that is having political reverberations as consumers are presented with astronomically high bills. Russia is putting the squeeze on Europe, which is reliant on it for gas. The Russians want the Europeans to buy gas from the Nordstream 2 pipeline, which will bypass Ukraine. This will deprive that country of revenue, which it sorely needs. In the meantime, Germany is increasing its use of coal-fired power.
What has caused the worldwide shortage of fossil fuel? After the chilly winter of 2020 to 2021 saw the U.K. and much of Europe draw down their energy reserves, the world began to emerge from the COVID-19 pandemic. Coming out of their slumber, Europe and Asia began to compete for the limited gas supplies of the U.S., Norway, and Russia—all of whom were refilling their own reserves.
This has led to a surge in gas prices in Europe and Asia. The spot price for gas has risen 400 per cent this year and electricity prices have risen 250 per cent.
The high prices are leading to closures of industries that are gas-intensive such as fertiliser manufacture. China has warned that this could lead to a global food shortage.
Ironically, it has also led to a shortage of CO2, which is in high demand for the humane slaughter of animals as well as the production of dry ice for food storage.
The current energy crisis emphasises the need for a plan to transition to a zero-emission economy. A failure to outline the risks of change could result in a political backlash.
The energy transition won’t be a smooth one but “a zigzag line," said Joost Bergsma, head of renewable energy fund manager Glennmont Partners:
"The direction will not change, there will always be more renewables in the system, but people have to be aware of the risks and the volatility issues of getting to that higher point.”
It is obvious that one of those risks is the premature jettisoning of fossil fuels.