By DAVID McHUGH, COLLEEN BARRY, JOE McDONALD and TATIANA POLLASTRI, Associated Press

Power shortages are turning off street lights and closing factories in China. The poor in Brazil choose between paying for food or electricity. German corn and wheat farmers cannot find fertilizers made from natural gas. And fears are growing that Europe will have to ration electricity if the winter is cold.

The world is in the throes of an energy crisis – fierce pressure on some of the key markets for natural gas, oil and other fuels that keep the global economy running and lighting and heating homes. As winter approaches, this has translated into higher utility bills, more expensive products and growing concern about how energy-consuming Europe and China will recover. of the COVID-19 pandemic.

The biggest tightening concerns natural gas in Europe, which imports 90% of its supply – much of it from Russia – and where prices have risen to five times what they were at the start of the year, to 95 euros from around 19 euros per megawatt hour. .

This is hitting the Italian food chain hard, methane prices are expected to increase sixfold and increase the cost of drying grain. This could potentially increase the price of bread and pasta in supermarkets, but the meat and dairy aisles are more vulnerable as beef and milk producers are forced to pay more for grain to feed their animals and pass the cost on to customers.

Political cartoons about world leaders

Political cartoons

“From October, we start to suffer a lot,” said Valentino Miotto of the AIRES association, which represents the grain sector.

Analysts blame a confluence of events for the gas crisis: Demand rose sharply as the economy rebounded from the pandemic, while a cold winter depleted reserves. Europe’s main supplier, Russian Gazprom, has withheld additional supplies for the summer beyond its long-term contracts to fill domestic reserves for the winter. China’s demand for electricity has rebounded, eliminating limited reserves of liquid natural gas, which travels by ship, not pipeline. There are also limited facilities to export natural gas from the United States.

The more expensive natural gas has even pushed up oil prices as some power producers in Asia can switch from gas to petroleum-based products. U.S. crude is above $ 83 a barrel, the highest in seven years, while the international benchmark Brent is around $ 85, as the OPEC oil cartel and allies are cautious about restoring reductions in oil. production carried out during the pandemic.

The crisis is likely short-term, but it’s hard to say how long the rise in fossil fuel prices will last, said Claudia Kemfert, an energy economics expert at the German Institute for Economic Research in Berlin.

But “the long-term answer that needs to be taken from this is to invest in renewables and energy conservation,” she said.

The European Union’s executive board urged member countries last week to speed up approvals of renewable energy projects like wind and solar, saying “the transition to clean energy is the best insurance against price shocks in the future and must be accelerated “.

In the meantime, some European gas-dependent industries are slowing down their production. German chemical companies BASF and SKW Piesteritz have reduced their production of ammonia, a key ingredient in fertilizers.

This left Hermann Greif, a farmer from the village of Pinzberg in Germany’s southern Bavaria region, unexpectedly empty-handed when he tried to order fertilizer for next year.

“There is no product, no price, not even a contract,” he said. “It’s a situation we’ve never seen before.” One thing is for sure: “If I don’t give the crops the food they need, they react with lower yields. It’s that simple.”

High energy prices are already hitting farmers in the area, who need diesel to run machines and heat to keep animals warm, said Greif, who grows corn to power a bioenergy power plant that supplies the electricity grid with energy without emissions.

Likewise in Italy, the cost of energy to process wheat and corn is expected to increase by more than 600% for the three months ending Dec.31, according to the Cereals Association. This includes the processing of wheat into flour and corn into feed for cows and pigs.

Giampietro Scusato, an energy consultant who negotiates contracts for the AIRES association and others, expects volatility and high prices to persist for the coming year.

High energy prices are also seeping into bread and pasta production through transportation costs and electricity consumption, which could eventually affect in-store prices. The milk and meat sections are particularly at risk as prices are currently low and farmers may be forced to pass on the higher cost of feed to buyers.

People around the world are also facing soaring utility bills this winter, including in the United States, where officials have warned home heating prices could soar as high as 54%. The governments of Spain, France, Italy and Greece have announced measures to help low-income households, while the European Union has asked for similar help.

It depends a lot on the weather. Europe’s gas reserves, usually replenished in summer, are at unusually low levels.

“A cold winter in Europe and Asia would risk dropping European storage levels to zero,” said Massimo Di Odoardo of research firm Wood Mackenzie.

This would leave Europe dependent on additional natural gas from a Russian pipeline that has just been completed or on Russia’s willingness to send more through pipelines through Ukraine. But the new Nord Stream 2 pipeline has not obtained regulatory approval in Europe and may not deliver gas until next year.

The decision by Russian suppliers to sell less gas in the spot markets reflects “an intention to push for the early certification of Nord Stream 2,” said Kemfert, the energy economics expert.

In China, blackouts have followed high coal and gas prices as power companies shut down despite limits on passing costs on to customers or government orders to stay below emission thresholds.

Factories in Jiangsu province, northwest of Shanghai, and Zhejiang in the southeast, closed in mid-September, and dozens have warned that deliveries could be delayed before the Christmas shopping season.

The Chenchen jewelry factory in Dongyang, a city in Zhejiang, suffered power outages for 10 days, said general manager Joanna Lan. The factory manufactures headbands, stationery and promotional gifts, and exports 80-90% of its products to the United States, Europe and other markets.

Deliveries were delayed “for at least a week,” Lan said. “We had to buy generators.

The largest city in the northeast, Shenyang, shut down street lights and elevators, and cut power to restaurants and shops for a few hours a day.

China’s gas imports have surged, but increased demand in Japan, South Korea and Taiwan has also helped push world prices up, said Jenny Yang, research manager for the team. China gas, power and energy futures at IHS Markit.

In Brazil, rising gas and oil prices were compounded by the worst drought in 91 years, which left hydropower plants unable to provide electricity and higher bills.

Rosa Benta, 67, from a working-class neighborhood in Sao Paulo, fears that she will no longer be able to provide for her unemployed children and grandchildren.

“Several times (energy company) Enel called me to tell me I was in debt. I told them, ‘I’m not going to stop feeding my son to pay you,’ ”Benta said outside his concrete house on a narrow, steep street. “If they want to cut off the electricity, they can come.

Benta lives on 1,400 reais (about $ 250) a month and says she often has to choose between buying gas for cooking or rice and beans.

“I don’t know what we’re going to do with our lives,” she said.

McHugh reported from Frankfurt, Germany, Barry from Milan, McDonald’s from Beijing and Pollastri from Sao Paulo.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Source link

Leave a Reply

Your email address will not be published.