Consumers are suffering as the ‘global energy shock’ unfolds, according to the World Energy Council.
The present oil crisis is different from previous ones, and consumers will face the brunt of it while dealing with growing inflation, according to Angela Wilkinson of the World Energy Council.
“I believe this is the first global energy shock; it is not the same as the oil shock problem of the 1970s.” “This is a consumer-driven crisis, and the consumer-driven changes that will emerge from this will be extremely important,” said Wilkinson, the organization’s secretary general, on CNBC’s “Capital Connection” on Thursday.
After Russia invaded Ukraine in late February, causing major global supply chain disruptions in the energy industry, Western countries levied hefty sanctions on Moscow for the unjustified attack.
The European Union has also proposed a phased ban on Russian oil, putting more downward pressure on energy costs.
The price of international benchmark Brent crude futures has risen more than 42 percent since the beginning of the year as of Friday morning in Asia. It last traded at roughly $111 per barrel, a significant increase from early this year’s lows of under $80.
“Consumers are in excruciating pain.” World Energy Council Secretary General Angela Wilkinson
Oil shocks hit the world in the 1970s as a result of unrest in the Middle East.
Middle Eastern oil producers cut off supply to the United States and other Western countries in 1973 after they aided Israel during the Arab-Israeli war. The Iranian revolution of 1978-1979, which saw the Shah of Iran deposed, prompted yet another energy shock. “Many of the lower half of society are now unable to purchase refined products,” Wilkinson said. “Some type of enormous reallocation of… money coming out of this crisis will be required. “Consumers are in excruciating pain.”
Official figures released this week showed that inflation in the United Kingdom hit a 40-year high in April, owing in part to rising energy prices. Consumer inflation in the United States remained near 40-year highs in April, indicating similar price increases.
“We were only talking about climate security six months ago.” We were discussing the Covid crisis and recovery a year ago,” Wilkinson remarked. “Right now, we’re dealing with a series of energy crises – Covid, climate change, and conflict. And today many countries are experiencing a cost-of-living crisis.”
“This new environment of cost and energy justice will be the toughest difficulty,” she continued. “There is a lot of uncertainty, and it will necessitate policy innovation as well as a fresh approach to international cooperation.”