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Global energy spending to hit $13 trillion on surging crude prices

With the global GDP projected to jump to $102.4 trillion in 2022 from $94.9 trillion in 2021, the anticipated energy spending will most likely exceed $13 trillion

Published: Thu 17 Mar 2022, 5:00 PM

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The spark spike in energy expenditures is comparable to the energy cost levels in the 1979-80 energy crisis, according to research consultancy for energy technologies Thunder Said Energy. — AFP file photo

The spark spike in energy expenditures is comparable to the energy cost levels in the 1979-80 energy crisis, according to research consultancy for energy technologies Thunder Said Energy. — AFP file photo

Soaring energy commodity prices are expected to drive up primary energy expenditures globally to a record 13 per cent of world gross domestic product (GDP), according to energy consultants.

With the global GDP projected to jump to $102.4 trillion in 2022 from $94.9 trillion in 2021, the anticipated energy spending will most likely exceed $13 trillion.


The spark spike in energy expenditures is comparable to the energy cost levels in the 1979-80 energy crisis, according to research consultancy for energy technologies Thunder Said Energy.

The enhanced energy spending forecast came as the US Energy Information Agency (EIA) increased its forecast price of international benchmark Brent crude oil to $116 per barrel for the second quarter of 2022. We expect gasoline prices to average about $4.10 per gallon (gal) during the second quarter of 2022 and then decline through the rest of the year.

The EIA expects gasoline prices to average about $4.10 per gallon during the second quarter of 2022 and then decline through the rest of the year.

“The price for WTI, the US benchmark, will average $113 per barrel in March and $112 per barrel for the second quarter of 2022,” EIA analyst Matt French said.

According to Thunder Said Energy, the expected record 13-per cent energy expenditure would be three times the average level of 4.0 per cent between 1900 and 2020, and 1.3 times the 2018 levels, the consultancy noted.

Since the beginning of the 20th century, primary energy expenditures have averaged 4.0 per cent of global GDP, rising to 8.0 per cent after the first oil shock, 13 per cent after the second oil shock, 10 percent in 2008, and 8-10 percent in 2013-2015, when prices were high.

“The estimate of a record energy expenditure as part of global GDP assumes prices of $250-$300 per ton of coal, $125-$150 per barrel of crude oil, and $40-45/mcf price of global natural gas, Thunder Said Energy noted.

“So this is not an ‘oil shock’ or a ‘gas shock’ but an ‘everything shock’,” Rob West, analyst and CEO at Thunder Said Energy, wrote in the report.

Crude oil, natural gas, and coal prices had rallied even before Russia’s invasion of Ukraine, but the war premium sent earlier this month prices of coal and natural gas to all-time highs, while crude oil prices hit a 2008 high last week of above $130 per barrel.

“Curtailing demand is the only short-term option to alleviate shortages,” West said.

Thunder Said Energy, like many other analysts and industry officials, shares the concerns about underinvestment in conventional energy in recent years, especially in light of the fact that fossil fuels still provide around 83 per cent of total energy demand globally.

— issacjohn@khaleejtimes.com



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