Engineering Post Report
Energy sector surely and certainly plays an important and vital role in the economic development of a country. The recent decades have witnessed a manifold increase in the demand for energy every where around the globe.
The three principal divers of increase in the energy demand are the surge in the economic activities, population growth and rapid technological transformation in the world.
The surge in the commodity prices in 2021and during the initial months of 2022 mainly lifted by the global economic rebound, improved growth prospects and ongoing conflict between Russia and Ukraine.
According to the International Energy Agency (IEA), the economic recovery from the pandemic of COVID-19, combined with unusual weather conditions have led to a sudden jump in the demand for electricity by more than 6 per cent in 2021. The cost of fuel and electricity have enhanced cost of overall production, consequently higher prices have substantially increased cost of living which have further eroded the purchasing power of the households across the world.
Currently, global economy faces higher energy prices which may remain intact due to the ongoing Russian-Ukraine war.. The war has led to significant disruptions to the production and trade commodities for which Russia and Ukraine are the key exporters.
World Bank’s latest forecasts have recently indicated that war in Ukraine is set to trigger the largest commodity shock. This would quite apprehensively contribute to huge price for energy related goods including oil and natural gas..
The Work Bank also have further revealed that energy prices are set to increase by more than 50 per cent, pushing up cost for households and businesses. This situation has has accordingly raised concerns at the global level, particularly for the developing economies like Pakistan where provision of energy subsidy has become a major challenge due to weak fiscal position.