We are in the middle of two separate energy crises, one immediate and one medium-term, that are linked only in that they both concern fossil fuels. In the short term, we have a problem with a scarcity of natural gas, which has caused the price to rise. In the medium term, we have the problem that we want to stop using oil and natural gas because burning them is the main contributor to global warming.
Unfortunately, the timescales are misaligned; otherwise, it would be sensible to allow the price of natural gas to rise, to help drive economic activity away from fossil fuels and towards low-carbon energy sources. Instead, the price rise has been so sudden – and will probably be so short lived – that its main effect will be to cause disruption and slow down the remarkable growth of the world economy since the Covid lockdowns.
Post-Covid recovery has caused the shortage, as it has caused the labour shortages that have interacted with it. Like blood returning to frozen limbs, the recovery has been a painful and difficult process, as so much economic activity was dislocated during the pandemic.
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