Abhishek Kumar Singh
The world is in danger of a new recession due to disruption in the supply of energy resources due to Russian attack on Ukraine and rising oil and gas prices. The way Russian President Vladimir Putin is showing plans to fight a protracted war in Ukraine, there is no hope of an immediate solution to the energy crisis.
Energy is an essential requirement for development. The demand for oil, gas and electricity has increased all over the world as the pace of the corona epidemic stops. The use of all these options of energy is increasing rapidly for all types of production in industries. Obviously, the need for energy is increasing day by day. Although it was already believed that with the eradication of the epidemic, when the situation starts to normalize, then the demand for oil, gas and electricity will increase rapidly for some time and then gradually become similar to the pre-Covid period. . To some extent it did, but in the meantime the Russo-Ukraine war created an imbalance in energy demand. Now there is more demand and less supply. So today there are many questions. Like how big is this energy crisis, what are its reasons, when and how will it end and what can be its alternatives?
International Energy Agency (IEA) Director-General Fatih Virol recently claimed that the world is facing oil, natural gas and electricity crisis at the same time due to Russia-Ukraine conflict and Western sanctions on Russia. Apart from this, with the advent of summer holidays, the crisis of fuel shortage has started in America and Europe.
Not only in Asia, Europe is also feeling that the supply of diesel, gasoline and kerosene is becoming very less at the same time. The reason is that Europe is dependent on imports not only for crude oil, but also for petroleum products. In such a situation, the situation has become that the scope of the current energy crisis in the world has become much wider than in the 1970s and 1980s and it is likely to be prolonged.
The world is in danger of a new recession due to disruption in the supply of energy resources due to Russian attack on Ukraine and rising oil and gas prices. The way Russian President Vladimir Putin is showing plans to fight a protracted war in Ukraine, there is no hope of an immediate solution to the energy crisis. There has also been a problem that many countries and federations are imposing sanctions on imports of Russian oil due to strategic factionalism. The European Union has banned the purchase of Russian oil for the next six months.
Similarly, Ukraine has closed pipelines passing through its land and delivering gas to Europe. All these factors have pushed inflation to the peak in European countries. However, there are other reasons behind inflation, such as the Russian attack hampering the export of grain and edible oils from Ukraine. Its effect is all-round. It is claimed that due to these reasons, inflation in America is the highest in four decades. But the real issue here is the energy crisis, which has created problems for India, Sri Lanka, Nepal and Pakistan etc. The situation in Sri Lanka is in front. Whereas the reality of Pakistan is that due to non-payment there, two dozen Chinese power companies have threatened to close their business.
As for India, the balance between demand and supply of energy here largely depends on imported oil and gas. India meets eighty percent of its oil and gas needs from imports from countries like Iran and Russia. On the other hand, since the rupee is continuously depreciating against the US dollar, due to this, a higher price has to be paid for imported oil and gas. It is not surprising if the oil companies increase the prices further to compensate for their losses, as the situation is.
The main reason for the rise in inflation in India has been the rise in the prices of crude oil, natural gas and edible oils. Again, in the past two and a half years, the combined work-from-home model of work has increased the consumption of electricity manifold. This is the reason why there has been pressure on thermal power stations to generate more electricity. This increased the consumption of coal. The situation is such that despite the continuous efforts of the government, the average stock of coal in thermal power stations is the lowest in nine years.
Our increasing dependence on coal-fired electricity does not bode well for climate change goals. But the sudden spurt in demand has slowed the pace of plans to promote green energy. The situation is that the central government has approved the import of coal from abroad for the next three years in view of the increasing demand for energy.
Apart from this, an emergency law has also been approved to keep the thermal power plants running on imported coal. Not only this, in order to ensure uninterrupted supply of coal from the mines to the power stations, steps were also taken to increase the movement of goods trains by canceling passenger trains. Not only this, now the government is also considering reopening about a hundred coal mines that have been declared financially incompetent, so that the supply of coal in the country can be made according to the increased demand.
A recent survey revealed a hallmark of the impact of the power crisis in the country. Half of the respondents in the survey, conducted among more than thirty-five thousand people, admitted that they had to face severe power cuts recently. Several factories in the three states had to be shut down due to power shortage not meeting production demand.
In a state like Odisha, between October and March 2022 last year, electricity consumption has increased by 30 per cent. This shows that there has been a sudden increase in the demand for electricity in the country. The real problem is the onset of the monsoon season, when the country’s coal mines are flooded with rain and coal mining stops. In such a situation, it is natural to have power cuts in homes.
The question is, how to meet the increasing demand for energy? There are many answers to this question. One is to either allow coal-fired thermal power plants to operate at full power, or move rapidly towards nuclear power, instead of worrying more about climate change goals for the time being. Sri Lanka’s faltering economy is an example of what the current emphasis on environmentally friendly green energy can yield. It is claimed that ever since Sri Lanka decided to completely organic its farming, its yield decreased manifold. This landed the country in a new serious crisis.
One measure is related to the adoption of nuclear energy. Nuclear power offers an alternative that does not have the problem of carbon emissions. However, there is a question about whether the slow moving world towards renewable energy will be ready to once again bet on that nuclear energy, which has no less dangers of its own.