Energy shortages around the world: Do you need to worry about your energy?
Nations around the world are suffering energy shortages, which has caused power rationing, blackouts, increased electricity prices and petrol shortages. While China, Europe and the UK are currently experiencing the worst of the issues, could the energy shortages make their way to Australian shores?
Possibly. But first let’s consider the main issues:
- Higher demand for energy
- Rising coal prices
- Shortage of international workers
- Increased workloads for the industry.
Better pricing for consumers has an impact
As we’ve discussed at Mozo, regulated energy pricing can protect consumers. But some energy producers are now seeing their revenue turn into significant losses, as they are unable to increase prices to the necessary levels needed for their energy supply to continue.
The United States is bracing for a likely shortage in natural gas itself over its upcoming winter, and with energy issues making their way across the globe Australia could soon find itself in the firing line.
China example: high prices causing consumer issues
The energy shortage in the world’s most populous nation is having serious impacts on its citizens, as producers fail to meet the growing power demand.
Coal prices have reached all-time highs in China, and with regulated energy prices, a number of power companies are unable to recoup the necessary costs to make meeting the increased demand worthwhile.
Now China’s National Development and Reform Commission has announced that it will begin to let firms increase their prices to reasonably meet demand and incurred costs.
The increased demand for coal-fired electricity couldn’t come at a worse time for China, which continues to work towards ambitious emission reductions in an aim to make the nation carbon neutral by 2060.
Europe example: supply shortages
Europe is facing supply shortages in gas, coal and even water that is forcing power prices to record levels. The average household bill for the month of August is expected to be 20% higher than usual, and a number of electricity retailers have been forced out of business by exceedingly high wholesale prices.
While some critics have blamed the rising prices on failures of renewable energy infrastructure, low wind power output has only been partly to blame for Europe’s struggles.
Rising carbon credit prices, failures in transmission infrastructure and large increases in the price of natural gas have all contributed to a shortage supply and rise in energy prices.
UK example: Brexit and energy woes
When the UK formally left the European Union as a result of Brexit, it tightened immigration rules that meant that EU citizens could no longer work throughout the UK without a visa.
Now, the UK is facing a shortage of lorry drivers which has seen fuel shortages across petrol stations as the supply simply isn’t reaching its destination. While this has caused prices to run abnormally high, the shortage in supply has also seen 90% of petrol pumps to run dry, according to the Petrol Retailers Association.
How is Australia’s energy industry fairing?
Thankfully, Australia is yet to feel any major effects of supply shortages.
Yes, the increase in natural gas prices are global, but Australia’s gas usage was down between 2018-19 and continues to remain relatively steady as renewable energy sources increase. The ACCC has predicted that NSW and Victoria may face shortages by 2024, but for now things remain stable.
On the pricing front, Australia’s energy has regulated caps similar to China. But while China is struggling to meet energy demand, Australia is seeing generation reach levels beyond what is currently needed due to new green power infrastructure being added to the grid.
The effects of global shortages may eventually trickle down to Australia, but for the moment the energy industry seems alright.
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