# Explainer-Global energy shortage or a coincidence of regional crises? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-01 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Understanding Energy Market Disruptions: The Truth Behind Meta Description: Learn about the factors behind rising energy prices and shortages in different regions, from China's coal crunch to Europe's power bill surge. Stay URL: https://financedigest.com/explainer-global-energy-shortage-or-a-coincidence-of-regional-criseshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-10-01t095702z4lynxmpeh8s17brtroptp4global-energy-disruptions-1736837724886-compressed.jpg) (Reuters) -British gasoline stations running dry, surging power costs in the European Union ahead of winter, forced restrictions on energy use in China and rising oil, natural gas and coal prices. You could be forgiven for thinking the world had suddenly been hit by an energy shortage, but you would be mostly wrong. While the squeezes slamming consumers and businesses is acute, the disruptions have less in common than you may think. Uniting them is an energy demand rebound from lows hit in depths of the coronavirus crisis that has raised prices for oil, gas and coal, ongoing supply restrictions by [oil cartel OPEC and global transport bottlenecks complicating fuel](https://www.financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuel.html "Oil spills and near misses: more ghost tankers ship sanctioned fuel") distribution. But the list of what separates them is longer, reflecting that the disruptions may have more to do with [local policy choices and regional](https://www.financedigest.com/danich-local-and-regional-banks-launch-mobile-wallet-powered-by-nets-new-hce-and-tokenisation-platform.html "DANICH LOCAL AND REGIONAL BANKS LAUNCH MOBILE WALLET POWERED BY NET’S NEW HCE AND TOKENISATION PLATFORM") dynamics than a global supply shortage. [Oil prices](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell") broke $80 a barrel this week for the first time in three years, with natural gas and coal also scaling multi-year peaks. The Organization of the Petroleum Exporting Countries and allied countries will [meet next week to decide whether to unleash spare production capacity to help tame prices](https://www.financedigest.com/eu-meets-to-try-to-break-gas-price-cap-impasse.html "EU meets to try to break gas price cap impasse"). Here is a summary of what is disrupting [energy markets:](https://www.financedigest.com/analysis-energy-market-turmoil-shakes-europes-green-power-plan.html "Analysis: Energy market turmoil shakes Europe’s green power plan") CHINA CRUNCH Beijing has begun rationing [electricity to energy-hungry businesses because of a crunch in coal supply triggered by stepped-up safety checks at Chinese](https://www.financedigest.com/lack-of-electric-vans-opens-door-for-chinese-other-ev-makers.html "Lack of electric vans opens door for Chinese, other EV makers") mines which dragged output below year-ago levels for much of the first half of the year. The [lower coal production in turn](https://www.financedigest.com/ahold-turns-to-solar-panels-lowers-thermostats-to-save-energy.html "Ahold turns to solar panels, lowers thermostats to save energy") fuelled a steep climb in local thermal coal prices, which have scaled successive record highs this year and are up over 80% year-to-date. Because Beijing [sets power](https://www.financedigest.com/negotiating-our-future-youth-set-to-grab-power-roles-at-cop27.html "‘Negotiating our future’: Youth set to grab power roles at COP27") prices, coal-fired power plants have been unable to operate economically with such high coal costs, and are shutting down. Goldman Sachs estimated that as much as 44% of [China’s industrial activity has been hit](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") by the power shortages. The China Electricity Council, which represents power suppliers, said on Monday that coal-fired power companies were now “expanding their procurement channels at any cost” in order to guarantee [winter heat and electricity supplies](https://www.financedigest.com/ceraweek-europe-gas-supplies-to-stay-tight-2-more-winters-equinor-ceo-says.html "CERAWEEK-Europe gas supplies to stay tight 2 more winters, Equinor CEO says"). But coal traders have said finding fresh import sources may be easier said than done, with Russia focusing on serving [Europe’s power needs](https://www.financedigest.com/europe-power-firms-need-1-5-trillion-euros-in-margin-calls-equinor-says.html "Europe power firms need 1.5 trillion euros in margin calls, Equinor says"), rains interrupting output from Indonesia, and trucking constraints hindering imports from Mongolia. [EUROPE’S POWER BILLS](https://www.financedigest.com/explainer-why-europe-faces-climbing-energy-bills.html "Explainer-Why Europe faces climbing energy bills") The price of [keeping the lights](https://www.financedigest.com/take-five-keeping-the-lights-on.html "Take Five: Keeping the lights on") on in Spain has tripled, reflecting a broader spike in power bills across the EU in recent weeks. The surge in electricity costs has raised fears of a difficult winter [ahead as households demand](https://www.financedigest.com/aussie-supermarkets-set-to-capitalise-on-high-inflation-but-softer-demand-ahead.html "Aussie supermarkets set to capitalise on high inflation, but softer demand ahead") heat and push consumption to a seasonal peak. The reason for [rising costs in Europe](https://www.financedigest.com/analysis-rate-rises-pile-pain-on-sme-firms-in-u-s-and-europe.html "Analysis-Rate rises pile pain on SME firms in U.S. and Europe") is a confluence of local factors, ranging from low natural gas stockpiles and overseas shipments, lacklustre output from the region’s windmills and solar farms, and maintenance work that has put nuclear generators and other plants offline. The timing is tough as demand is expected to rise in the coming months, but the return of power plants from maintenance and the startup of the recently completed [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 2 gas pipeline from Russia to Germany could eventually ease markets. In the meantime, Spain, Italy, Greece, Britain and other others are planning [national measures](https://www.financedigest.com/national-cinemedia-releases-first-cinema-attention-measurement-study-conducted-by-lumen-in-collaboration-with-dentsu.html "National CineMedia releases first cinema attention measurement study, conducted by Lumen in collaboration with dentsu"), ranging from subsidies to price caps, aiming to shield citizens from rising costs as economies recover from the COVID-19 pandemic. UK PETROL STATIONS [RUN DRY](https://www.financedigest.com/yangtze-tributary-runs-dry-as-china-faces-another-month-of-drought.html "Yangtze tributary runs dry as China faces another month of drought") Panic-buying by motorists has left [fuel pumps dry across major cities in one of the worst energy](https://www.financedigest.com/bank-finance-for-cleaner-energy-grows-but-still-lags-fossil-fuels-report.html "Bank finance for cleaner energy grows, but still lags fossil fuels – report") disruptions facing Britain in decades. [Fights have broken out at filling stations as the government urged](https://www.financedigest.com/fighting-traps-civilians-in-ukraine-plant-as-putin-urges-defenders-to-disarm.html "Fighting traps civilians in Ukraine plant as Putin urges defenders to disarm") calm. But the problem is not a lack of gasoline, it is a lack of truckers to get it from refineries to [retailers – one of the odd side-effects of Britain’s](https://www.financedigest.com/britains-next-buys-failed-furniture-retailer-made-com-400-jobs-axed.html "Britain’s Next buys failed furniture retailer Made.com, 400 jobs axed") EU exit and a hangover from postponed trucker certification and training during the pandemic. The fix? Prime Minister Boris Johnson’s [government has been issuing temporary visas to thousands](https://www.financedigest.com/southwest-cancels-thousands-more-flights-u-s-government-vows-scrutiny.html "Southwest cancels thousands more flights; U.S. government vows scrutiny") of foreign truck drivers to get fuel to market, has put the army on standby to help out, and hopes to restore order at the pumps before the holidays. (Writing by Richard Valdmanis, Editing by Marguerita Choy and Alexander Smith) --- This blog is powered by Superblog. 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