BAKU, Azerbaijan, Oct.12
By Leman Zeynalova – Trend:
In Europe, many businesses are likely to face the double impact of rising energy costs and a potential decline of consumer spending due to households’ increased energy-related expenses, Trend reports with reference to the International Energy Agency (IEA).
IEA said in its latest report that rising power prices are already impacting operations of electricity-intensive industries. “And several companies have temporarily curtailed ammonia and fertilizer production, citing deteriorating margins due to the sharp increase in gas prices.”
The historic plunge in global energy consumption in the early months of the Covid-19 crisis last year drove the prices of many fuels to their lowest levels in decades, reads the report.
“But since then, they have rebounded strongly, mainly as a result of an exceptionally rapid global economic recovery (this year is on track for the fastest post-recession growth in 80 years), a cold and long winter in the Northern Hemisphere, and a weaker-than-expected increase in supply.The higher gas and coal prices, combined with rising European carbon prices, have resulted in higher electricity prices. In Germany, electricity prices leaped last week to their highest level on record, up more than six times from a year ago. In Spain, where gas-fired power generation plays a larger role in setting electricity prices, the increase was even higher. In recent weeks, lower-than-expected wind generation has provided additional upward pressure,” said the IEA.
Meanwhile, global oil demand continues to recover from its 2020 lows, and prices at the pump in many countries are at or near their highest levels in years, note the agency analysts.
“Companies around the world are expected to continue to draw on their oil stocks to help meet demand until the end of this year. The price increases are expected to result in sharp upward pressure on household energy bills and also present broader risks to economic activity, especially for sectors that are directly exposed to the price rises. Many governments have taken measures to alleviate electricity bills, especially for vulnerable consumers.”
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