Why energy prices will stay high even if global economy tanks
It is notable that the protesters who have successfully pressed some universities to divest from fossil fuels do not seem to be lobbying nearly as hard to turn down heating and air conditioning.
Over the past two and a half years, world oil and gas prices have been subject to demand shocks and supply shocks – and sometimes both simultaneously. The resulting volatility in energy markets is both a reflection and a microcosm of a careening global economy.
The price of Brent crude oil declined from a “normal” $US68 a barrel at the end of 2019 to $US14 per barrel in April 2020 as the COVID-19 pandemic spread worldwide. Two years later, in March this year, the price surged to $US133 a barrel after Russia invaded Ukraine.
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Kenneth Rogoff is a former chief economist of the International Monetary Fund and professor of economics and public policy at Harvard University.
