Currently, the United States and especially Europe is going through a crisis due to the record increase in energy prices. This is particularly worrying since it occurs in the middle of winter, a time when companies and homes tend to make more use of electricity to cope with low temperatures.

Despite the fact that several countries are struggling to control these increases, mainly because they are still on the path of economic recovery post-COVID-19, it is a difficult situation to manage that affects not only local households and companies but also in other aspects such as the increase in certain raw materials around the world, such as the price of oils and their derivatives.

To get an idea, natural gas prices have gone from 16 euros per hour to 75 euros per hour since the start of the energy crisis. This is a considerable and unprecedented increase that puts the European population in trouble as it represents a rise of more than 360%.

Despite the fact that the European Union, for some years now, has been gradually reducing its dependence on fossil fuels and switching to renewable energies, the change has not been fast enough to face the current crisis. 

Natural gas and coal represent more than 35% of the total production of the European Union and gas represents more than a fifth. The use of one or the other varies from country to country, and as coal has been phased out, many countries have embraced natural gas as a transitional resource while installing green alternatives such as wind turbines and solar panels. However, gas is used more for heating and cooking in homes, which means that they are the most affected when receiving consumption bills. In Chem Fluid We briefly analyze this situation.

At Chem Fluid we briefly analyze this situation.

Why Does This Accelerated Increase in Energy Prices Occur?

This critical rise in prices occurs for several reasons:

• There is currently an increase in energy demand due to the removal of restrictions caused by the pandemic.
• To this can be added a reduction in the supply of gas worldwide.
• While the elimination of coal as a primary energy source is a positive towards the renewable energy transition, wind power production has been lower due to weather factors.
• The reopening of businesses, offices, and restaurants, among others after the pandemic caused an influx of consumers in physical locations and this caused an increase in energy demand.
• In addition, the recent war between Russia and Ukraine has also had an impact, since Russia is the main exporter of gas to the European Union.
• Like Europe, Asia has also suffered a very cold winter, which has caused a high demand from countries with dense populations such as China.

General Crisis of Raw Materials

As expected, this increase in the price of gas affects the cost of other raw materials around the world. 

Between dwindling inventory, the reopening of the world economy, rising demand, and slow supply, a shortage of products have been created that affects production.

Commodities such as crude oil, gold, oil, and corn are forecast to rise substantially in price over the next 12 months. In fact, for a few months, the shortage of microchips has seriously affected the technology and automotive industry worldwide.

This phenomenon is due to the fact that when an inventory is limited or reduced, as is happening with gas, it affects other types of inventories which, in turn, are also in crisis due to the lack of personnel in various distribution chains. According to experts, the only way to balance the markets is the destruction of demand through higher prices.

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