Share
A massive environmental, social and corporate governance (ESG) revolution is happening right now. And rightly so, because it’s vital we phase out fossil fuels and switch to renewable energy sources as soon as possible.
But before that can happen, there will be a surge in demand for energy commodities like crude oil, natural gas, petrol and copper.
Let’s take a look at four major energy commodities and what lies ahead in more detail:
On 1st July 2022, JP Morgan Chase warned that Brent Futures (the price of oil) could rise to an eye watering $380 per barrel if Russia decides to reduce its oil production by five million barrels in retaliation against sanctions.
This is concerning as many other countries are failing to reach oil production quotes due to lack of investment, poor infrastructure or political instability.
At the other end of the scale, Citibank says the instability could send prices crashing to $65 per barrel by year-end and $45 by 2023 if a recession reduces demand.
Natural Gas prices in the UK are surging. One reason is an outage at a Norwegian North Sea gas platform. And if that wasn’t enough, a gas leak at the Sleipner field in the North Sea has affected imports when the UK was heading into its hottest heat wave on record.
Gas prices have also seen a steep increase in the last three years, as seen in the graph below:
In April 2019, the average price per therm was 34.98 pence, but by March 2022, it had increased to a whopping 313.57 per therm. However, prices have reduced to around 186.14 per therm.
This is positive, but it’s still way above 2019 levels.
One of the best ways of conducting electricity at scale is with copper. And with the switch to renewables, we’ll need a lot more copper. The problem, however, is that we don’t have enough copper now, and getting it out of the ground is a slow process.
The only way to increase this is with heavy investment, which inevitably increases costs.
A standard car uses between 8kg to 23kg of copper, while electric cars use 83kg and electric buses use up to 369kg — that’s a lot of copper.
Forecasts show global copper demand from renewable energy generation will reach 852,000 tonnes by the end of 2022, with the electric vehicle market accounting for 1.1 million tonnes alone.
To put that into perspective, the sale of electric vehicles almost doubled between 2020 and 2021, with China and Europe leading this surge in sales:
In China, 3.3 million new electric cars were purchased last year, with 2.3 million being sold in Europe. And although the demand for EVs might suffer in short term periods, as you can see in the graph above, it shows no sign of slowing down too much.
Whether you drive or not, you can’t have avoided the news throughout 2022 on prices rising at the pumps.
Pre-covid petrol cost 125p per litre, but as of July 2022, it is around 190p per litre. That’s a 44% increase year on year and a 52% increase from pre-covid levels. And petrol prices have a knock-on effect on everything else, with those increases being added to essential everyday goods that are now more expensive to courier.
In the twelve months between July 2021 and July 2022, the price of commodities has increased rapidly:
One of the biggest concerns here is the US CPI, as the US Dollar is the world’s reserve currency. At 9.06%, it’s at its highest inflation rate since November 1981, when it was at 12%:
With the UK inflation rate at its highest since the 1970s and the US CPi likely to creep into double digits in October (when energy prices increase further), it will put more pressure on economic growth. Prices will likely increase further, and another recession looks almost inevitable.
Energy prices are set to increase as we head into Autumn, so you need to make sure you’re on an energy contract that won’t cost you the earth. If you’re looking to switch or your contract is due to end, we can help.
At Inteb, our energy purchasing team can help you create a strong energy strategy and discuss your best energy contract options before you lock in and commit.
Let’s get the conversation started – call us now on 0151 601 3476
View
View
View
View
View
View
