High fuel prices – the global economic crisis.
The world economic outlook has deteriorated significantly, largely as a result of Russia’s invasion of Ukraine.
By the beginning of this crisis, the world economy had not yet fully recovered from the pandemic. Even before the war, inflation was rising in many countries as a result of supply-demand imbalances and support measures taken during the pandemic, causing monetary policy to tighten. China’s most recent cases of self-imposed isolation could create new bottlenecks in global supply chains.
A geopolitical “tectonic shift” would entail long-term efficiency losses and increased volatility and would seriously impede the rules-based system that has defined international and economic relations for the past 75 years. Today, everyone should consider limiting themselves as much as possible from all geopolitical fluctuations and be energy independent.
The rapid growth of gasoline prices is also observed in other regions of the world.
In a number of European countries, the psychological barrier of gasoline prices of 2 euros per litter has already been exceeded.
According to data from Transportal as of March 14, 2022,
The Netherlands (2.57 euro/litter), Norway (2.53 euro/litter), Italy (2.27 euro/litter), Finland (2.24 euro/litter), Sweden (2.22 euro/litter), Denmark (2.14 euro/litter), Greece (2.12 euro/litter), France (2.09 euro/litter), Portugal (2.05 euro/litter), Belgium and Germany (2.02 euro/litter).
Spain (1.92 euro/l), Switzerland (1.9 euro/l), Great Britain (1.84 euro/l), Lithuania (1.76 euro/l), Slovenia (1.76 euro/l), Croatia and Estonia (1.75 euro/l), Slovakia (1.73 euro/l), Latvia (1.72 euro/l), Austria (1.71 euro/l) are approaching that mark.
More and more often there are forecasts of reaching the 3 euro/litter mark.
To mitigate the situation for consumers in Europe various measures are being considered, including reduction of excise duties, the possibility of temporary abolition of VAT, various options to reduce the tax burden on wholesalers and retailers.
There is also a significant increase in gasoline prices in the US.
In the past week, the average price of gasoline at gas stations in the U.S. reached $4.32/gallon ($1.14/gallon). In the East Coast states, prices reached $5.7/gallon ($1.5/litre). Gasoline prices have risen by 1/3 over the year and by 21% in the last month.
However, the global energy crisis has been growing for more than a year. Oil prices have been rising consistently since October 2020, when the world economy began to emerge from the crisis triggered by the COVID-19 pandemic. A small decline was only seen in the wave of the Omicron variant of the coronavirus in November 2021, but this has now been fully offset and Brent is now holding above $110/bbl. The recovery in business activity and industrial production is now fully offset. A rebound in business activity and industrial production, along with an increase in population mobility, has led to strong demand for oil, petroleum products and fuel.
To truly overcome the energy crisis, the EU now intends to double the share of renewable energy sources and bring it to 45% (the pre-war plan was 40%), and to reduce energy consumption in general by 2% rather than 1.5% per year and to reduce it by 2030 by 13% rather than 9%.
To accelerate the “green” restructuring, the European Commission proposed to make solar panels mandatory for all office and public buildings as early as 2025, and from 2029 for new residential buildings as well. Gas boilers will be replaced by heat pumps, and the construction of wind turbines on land and sea will be approved under an accelerated program.
The costs should eventually pay off, not only politically by reducing dependence on the belligerent eastern neighbor, but also financially. According to calculations of the European Commission, the 27 EU countries by 2030 will annually save 80 billion euros on gas imports, 12 billion of oil and almost 2 billion of coal.