Our cover this week looks at the first big energy scare of the green era. Since May the price of a basket of oil, coal and gas has soared by 95%. American petrol prices have hit $3 a gallon. Blackouts have engulfed China and India. Britain has turned its coal-fired power stations back on. And Vladimir Putin has just reminded Europe that its supply of fuel relies on Russian goodwill. The panic is testament to how much modern life depends on abundant energy: without it, bills become unaffordable, homes freeze and businesses stall. However, the panic has also exposed deeper problems as the world shifts to a cleaner energy system, including inadequate investment in renewables and some transition fossil fuels, rising geopolitical risks and flimsy safety buffers in power markets. The world may yet escape a severe energy recession: the glitches may be resolved and Russia and OPEC may grudgingly boost oil and gas production. At a minimum, however, the cost will be higher inflation and slower growth. And more scares may be on the way. |