Winter’s Energy Price Spike Will Add to the Fed’s Problems

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Only a few weeks ago Federal Reserve Chair Jerome Powell acknowledged that inflation could continue for some time.

Appearing at an event at the European Central Bank, he I got it:

The current surge in inflation is actually the result of supply constraints that meet very strong demand. And it’s all about the resumption of the economy. This is a process that has a beginning, an intermediate, and an end. It’s very difficult to say how big the effect will be or how long the effect will last in the meantime.

This was the first step in recognizing the reality that consumers face when they go to stores and see prices get higher and higher.

However, Powell may soon have another temporary scapegoat for inflation. Winter is coming almost every year. And energy prices are skyrocketing.

Energy prices continue to rise in 2021

Since the beginning of the year, natural gas prices have risen by more than 120%. At that time, kerosene surged by more than 60% and coal surged by more than 220%.

Energy prices are skyrocketing around the world

Recent Wall Street Journal Highlighting Reasons for soaring coal prices:

Global production of coal, which produces about 40% of the world’s electricity, is about 5% below pre-pandemic levels.

In Europe, rising prices for coal and other energy resources are damaging factory production and pushing up household energy prices. Major Asian coal importers, including Japan and South Korea, are struggling to secure supply.

In China, reduced supply and rising costs have caused invisible power shortages for more than a decade, hitting the industry and turning off signals in some cities to save power. I am being prompted.

Supply cannot grow rapidly. Demand could also increase as winter arrives and coal-heated homes need more commodities.

Increased heating demand will also affect natural gas and kerosene. This is an expensive winter for consumers and points to another temporary factor that Powell cites as a reason for rising inflation.


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