World’s Energy Crisis and Hike in Fuel Prices

A predicted crisis

ASME IIEST Shibpur Student Section

Published in

The Treatise

5 min readOct 27, 2021

By Shalvi Goyal

Are you fed up of sky-rocketing fuel prices? Did you count the no. of power cuts you had to sit through this summer? Well, you’re not alone if you think that the number of blackouts has rapidly increased in the past few years and the fuel price hikes are pinching hard on common man’s pocket.

The power crunch is neither sparing the developing countries nor the developed nations. Coal prices have more than doubled this year and crude oil prices are spinning out of control. In India, petrol and diesel prices can be seen increasing every dayand has reached a price of about $85/barrel.

What is causing such a crisis? Even after much research and development work done in the field of renewable sources of energy, why are we still not able to deal with “World’s Energy Crisis” easily?

Through this article, we will know the reasons which has led us to such energy crisis, its effects and the solutions through which world is trying to cope up and deal with it.

Reasons:

The reasons behind the World’s energy crisis and sharp rise in fuel prices are:-

The first comes the pandemic. The pandemic essentially reduced the global demand for oil and other energy sources, which limited their production. However, the faster-than-expected recovery from the pandemic has now led to a rapid increase in energy demands, causing sudden inflation.
The climate change. Heavy rainfall in countries like India & China has made coal mining difficult thus leading to shortage of coal.
“Greenflation” or “Shift in Energy Sources” can be rendered as another reason behind crises.

Natural gas produces 45% less CO2 emissions than coal and around 30% fewer emissions than oil & is more reliable than renewable energy sources.

AND as the world is moving towards more sustainable sources of energy, the demand for the yet limited energy, like natural gas, has increased manifold, which has caused a massive price rise. Analysts also point out that increasing restrictions placed by governments on traditional energy sources has also caused “greenflation” and simultaneously “a massive price rise”.

Though a lot of research and development is done in the application of renewable energy sources, yet we can’t confide on it because they are quite energy-dilute and unreliable. Unlike coal & natural gas, renewable energy lacks energy storage solutions.

Also, countries need to build massive infrastructure and invest millions & millions…..So, it will take some time before we can rely completely on it.

**Image:** Global energy crisis is the first of many in the clean-power era

The reasons behind further increase in fuel prices in India are:-

Back in the pandemic-hit days of 2020, oil demand shrank as economies shut, and price sank to $19/barrel.

OPEC+ turned to supply cuts to stabilize prices.

Fast forward to 2021, economies began recovering, and demand returned.

OPEC+ said they’d boost output to meet demand. But the supply’s not adequate yet. Thus, with demand greater than supply, prices soared. This spelled trouble for India, since we rely on imports to meet 85% of oil needs, and buy most of it from the Gulf to convert to fuel.

Increasing central and state taxes on petrol and diesel are the key reason for the prices of petrol and diesel being at record highs.
Heavy rains in coal mine areas during September 2021 adversely affected the coal production as well as dispatch of coal from mines.

Effects:

Fuel price hike directly or indirectly affects all the major sectors like transportation, textiles, automobiles, manufacturing, etc. This affects the prices of daily essential commodities which are transported on a daily basis. Banking sector is also expected to suffer due to high inflation level. The continuous increase in fuel prices will have a widespread impact on citizens and the overall economy.

Solutions being put forward to overcome such crisis:

Necessity is the Mother of Invention. The energy crises has led many countries to come forward and dive deep into alternative forms of energy. Many countries are trying to find the right balance between Green Energy and Fossil Fuels. For instance,

California is plugging in giant batteries in its electrical grid to help power it during a heatwave. The batteries store excess energy during peak solar hours and dispatch it back to the grid after the sun sets.
World is getting more inclined towards the use of Electric Vehicles than the fuel vehicles.

**Image:** GLOBAL ENERGY CRISIS CAUSES, EFFECTS

Do you know that a Rental Car Company, Hertz, purchased 100,000 Tesla Model 3 Cars for Rental Fleet?! This order soared Tesla Inc.’s shares, pushing the automaker’s value past $1 trillion for the first time.

Several countries including Canada, France and the United Kingdom have passed laws to ban the manufacture and sale of gasoline-fueled conventional vehicles by next few years.
Nuclear power is popularizing amongst nations. Japan has approved energy plan with key role for nuclear. Survey suggests nuclear power popular in France.
In India, profound attention is being given to renewable energy sector and it has now become the fourth most attractive renewable energy market in the world.
To overcome hike in fuel-prices, India is forming a PSU and private refiners’ group to seek better oil import deals, who will strategize and jointly negotiate oil terms. By uniting refiners, India is trying to build a consumers’ cartel so it can shift the power dynamic towards consumers.

References (Check these out for further information):

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