Srinagar, Oct 1: Energy deficient Jammu & Kashmir might be approaching this year’s upcoming winter with a combination of not-so-favourable energy cost and supplies outlook in the face of the looming global energy crisis and rising fuel prices.
A report in the Financial Times on Wednesday said that crude oil, coal and European gas prices have all hit record highs as crude oil pushed above $80 a barrel in the clearest signs yet that the world is heading into an energy crunch.
Brent, the international benchmark, rose as much as 0.9 per cent to $80.22 a barrel early on Tuesday, hitting a three-year high for the second consecutive day before settling 0.6 per cent lower at $79.09.
This is bad news particularly for Jammu & Kashmir, where fuel prices – both of diesel and petrol – carry the weight of high taxes and exorbitant transportation costs.
Liquified Natural Gas (LNG) prices are also likely to go up further in India, with prices and availability both likely to come under strain in J&K during the winter months. The upward strain on coal prices are also likely to result in demands for an upward revision of electricity tariff in J&K and elsewhere, given that fact that the national power grid draws power from both coal and hydro power generation stations.
“J&K’s administration would need to plan well in advance, factoring in worst case scenarios in terms of global supplies shortage, prices, harsher winter and the usual closure of the Srinagar-Jammu highway and roads to other regions”, said Tassaduq Khan, who works for a private gas company in J&K.
Record gas prices because of a shortfall in global production are now feeding back into oil markets and expected to push crude higher as some industries shift to using oil to generate power.
“We’re looking at not just the UK and Europe but a potential global energy crisis coming into the winter,” Robert Rennie, global head of market strategy at Westpac was quoted as saying by FT.
“[The price] could go much higher if the weather is as cool this winter as some people predict,” said Andrew Gillick at energy consultancy Enverus.
Soaring energy prices in the US have already sparked some White House concern, with President Joe Biden calling earlier this month for an investigation into why average petrol prices — up almost 50 per cent in the past year to about $3.19 a gallon — are so high.
The broad rally in energy markets comes amid constrained supply and growing competition between Europe and China, which has pushed gas prices to record levels in recent weeks. The combination of soaring thermal coal prices, which are up 96 per cent in China this year, and central government targets to reduce carbon emissions has increased Chinese demand for shipments of liquefied natural gas as a cleaner option to coal-fired power.
“Energy and oil demand have picked up significantly in 2021, after the massive drop in 2020, and continued expansion is forecast for the longer term,” Mohammed Barkindo, Opec secretary-general, wrote in the foreword to group’s annual oil outlook report.
The tight gas market is also driving up the cost of coal in both Asia and Europe, which was already high, in part because of the reluctance of banks and investors to finance new projects. The price of high-grade Australian thermal coal, the marker for the vast Asian market, hit a record high on Tuesday after a cargo for delivery in December was purchased at $204 a tonne on GlobalCoal, an online trading platform.
