Why are energy prices rising?
Cost of getting electricity (cumulative measure of total procedural, temporal, generation and
import costs associated with getting energy delivered)
The World Bank's getting electricity indicators measure the procedures, time and cost
required for a
business to obtain a permanent electricity connection for a newly constructed warehouse.
(Link)
The cost of getting electicity is highlighted for a select group of countries, and is
indicative of the cost associated
with ensuring permanent energy supply for a new business in each nation states.
This cost has traditionally been substantially higher in China relative to both
other developed nation states such as the United States developing
countries such as India.
After China, the cost of getting electricity is the highest in the United Kingdom (relative
to the other countries in this analysis), however, this cost has reduced substantially from 2014 onwards.
Inflation, consumer prices (annual %)
The World Bank's inflation indicator measures
the annual percentage change in the cost to the average consumer of
acquiring a basket of goods and services that may be fixed or changed at specified intervals,
such as yearly.
(Link)
Inflation is a cost of living indicator as it can be used
to assess the impact of increases on the affordability of energy.
Certain developed economies, such as the United States and China witnessed deflation or a
decrease
in year on year prices in 2009 (in the aftermath of the 2008 financial crisis), this can
largely be attributed to
associated economic slowdowns and contractions.
Inflation rates have traditionally been substantially higher for
developing economies such as India, relative to more developed
nation states such as the United States and the United Kingdom, though India's inflation
rate is now more in line with that of other countries.
In 1965, the energy mix was heavily dominated by crude oil and coal consumption.
The gradual phasing out of coal consumption has led to increasing reliance on natural gas.
However, investment in renewable energy has helped diversify the energy mix in recent years and led to the rapid growth of wind energy consumption.
Notice the funnelling effect from 2005-2020. This suggests energy consumption has gradually reduced.
How self-reliant is the UK when it comes to energy?
Year on year variation of import contributions suggests that imports play an important part in dealing with sudden changes in demand.
Imports reliance increased at the turn of the century, but through the growth in wind production has begun to decrease again.
Currently, almost 30% of UK energy consumption is imported.
With such a significant part of the energy mix formed of imports, the UK is affected by international politics, prices and shortages.
How does the UK’s import dependency compare to other countries?
The UK is in a unique position, transitioning from a major exporter to importer.
Other countries have experienced slower change.
The USA has bucked the trend and become a net exporter.
Notice Germany’s outstandingly high reliance on imported energy.
The UK’s reliance on imported energy is comparatively high against other case study countries, but where does this imported energy come from?
How do countries compare when we look at energy consumption per person?
This interactive chart shows per capita energy consumption. We see vast differences across the world.
The largest energy consumers include Iceland, Norway, Canada, the United States, and wealthy nations in
the Middle East such as Oman, Saudi Arabia and Qatar. The average person in these countries consumes as
much as 100 times more than the average person in some of the poorest countries.
In fact, the true differences between the richest and poorest might be even greater. We do not have
high-quality data on energy consumption for many of the world’s poorest countries. This is because they
often use very little commercially-traded energy sources (such as coal, oil, gas, or grid electricity)
and instead rely on traditional biomass – crop residues, wood and other organic matter that is difficult
to quantify. This means we often lack good data on energy consumption for the world’s poorest.
The U.S. average energy use per person remained steady overall during the 1990-2020 period, but there
were two more significant decreases in 2004-2012 and after 2018, respectively, and it was found that
both decreases were due to industrial upgrading and expanding the use of new energy sources.
India as a whole shows a smooth upward trend, also with the smooth development of the country.
The UK has two decreasing trends overall after 2006, similar to the United States, respectively, after
2006-2011 and 2018.
China has shown a rapid rise in the overall trend during the 30 years, especially after 2002, and the
initial exploration may be due to the rapid development of manufacturing after joining the WTO.
Overall, average energy use per person is much higher in developed countries than in developing
countries, but while it is declining in developed countries, it is rising in developing countries.
Decreasing Energy Per GDP indicates decoupling from economic growth.
Germany, the UK, and the US have experienced decoupling.
India's levels are lower likely due to a different extent of industrialisation.
China has experienced the most variation, the 2005 peak likely due to joining the World Trade Organisation.
Increasing use of renewable energy is one driver of decoupling energy use and economic growth.
Many countries see increasing levels, while the US and India have lower ratios in recent years.