Global Energy Crisis – OZY

Due to limited generation capacity, South Africa’s electricity utility, Eskom, has implemented daily blackouts at certain times to save energy. These cuts can last for several hours and disrupt the work and lives of people across South Africa.

“I fear that the power cuts that South Africa is experiencing will have a huge impact on the South African economy,” South African economist Dawie Roodt told OZY. Living with regular blackouts forces residents to turn to candles, gas and solar power, which is already adding to the cost of living, Roodt says.

The uncertainty surrounding electricity supply also affects companies’ ability to plan. The South African Chamber of Commerce and Industry (SACCI) monthly Business Confidence Index recorded a decline resulting from the high cost and inconsistent supply of energy, in addition to other factors, such than the uncertainty caused by Russia’s invasion of Ukraine.

In a statement, electricity company Eskom said: “We call on all South Africans to help limit the impact of shortages by continuing to reduce electricity consumption and switch off all non-essential items.”

An S&P Global survey of purchasing managers at Egyptian companies found that the cost of purchasing goods has accelerated, driving down new orders. Some blame the Egyptian government’s new import requirements for requiring companies to obtain bank-issued letters of credit to import goods. Meanwhile, the Egyptian pound weakened against the US dollar as global commodity prices soared following the war in Ukraine. Business confidence in Egypt has fallen to its second-lowest level on record, according to Bloomberg News. (Source: Bloomberg)

According to the Wall Street Journal’s Dollar Index measure of the dollar against 16 currencies, the US currency fell 1.1% in May, breaking a streak that had led to a multidecade high in early May. The drop slowed the dollar’s recent rally against other major currencies over the past few months. As consumer spending remains strong and employers add jobs, the pace of wage growth has now slow motionand American consumers are tap into savings to fund their spending – an index of how households are coping with higher prices. “I think the dollar has peaked,” said Steve Englander, head of North American macro strategy at Standard Chartered. (Source: The Wall Street Journal)

US President Joe Biden is expected to visit Saudi Arabia and other Middle Eastern countries in July amid soaring gas prices. Currently, the average price of a gallon of gasoline in the United States is around $4.88, according to Data from the United States Energy Information Administration. During his 2020 campaign, Biden pledged to castigate Saudi Arabia for the assassination of dissident Jamal Khashoggi. But amid rising global energy prices due to Russia’s invasion of Ukraine, Biden is expected to ask Saudi Arabia to produce more oil to drive down prices at the pump. (Source: The New York Times)

Leaders of the Americas are working on a framework for greater cooperation around migrant flows. According to Bloomberg News, it’s the result of months of collaboration and will be the culmination of the Summit of the Americas, held this week in Los Angeles. Proposed commitments include better access to public services for migrants and refugees, as well as legal employment opportunities. Mexican President Andrés Manuel López Obrador, however, refused to attend the summit, as Cuba, Nicaragua and Venezuela had been excluded, apparently due to human rights concerns. (Source: Bloomberg)

Didi, China’s top carpooling app, will soon resume operations as Chinese regulators conclude a year-long investigation. Didi was removed from domestic app stores last year after Chinese authorities raised concerns about the data collection, calling it a national security issue. The app then became a symbol of China’s crackdown on its domestic tech companies. The decision to end this investigation and allow Didi to return to business is an indication that Beijing is eager to tackle its flagging economy. Didi was almost 600 million users worldwide in January 2021, and at press time, the company was worth approximately $11 billion on the New York Stock Exchange. (Source: The Wall Street Journal)

“There remains immense pressure on inflation as fuel and energy costs continue to climb,” said Ronnarong Phoolpipat, The director general of Thailand’s Office of Trade Policy and Strategy, told Bloomberg News. Consumer prices in Thailand rose 7.1% from a year earlier, the highest rate in the country since 2008, according to new data released on Monday, with particularly strong price increases in food. and energy. “We just want OPEC’s oil production increase to start pushing crude prices down,” Ronnarong told Bloomberg News. (Source: Bloomberg)

Amid pledges to phase out Russian gas and oil, the EU is considering alternatives previously seen as unworkable, according to the Wall Street Journal. Possible measures include encouraging or even requiring the replacement of gas heating systems with electric heat pumps, and possibly capturing the heat generated by large data centers. Danish MEP Niels Fuglsang said: “You may wonder which is more unrealistic: having an ambitious approach to energy efficiency or continuing to depend on Putin’s gas and oil. (Source: The Wall Street Journal, The Economist)

In a tentative deal struck without Ukraine’s participation, Turkey has offered to clear mines off the coast of Odessa and escort grain shipments from this vital Black Sea port, which could help resolve regional food shortages. But Ukrainian officials fear the plan could leave the port vulnerable to Russian attacks. Ukraine’s Deputy Economy Minister Taras Kachka said Russia was seeking to pin the blame for supply chain disruptions on Ukraine. “But the fact remains that the food crisis was artificially created by Russia and Russia alone,” Kachka said in a message to Bloomberg News. Meanwhile, US State Department officials are warning that Russia is trying to sell stolen Ukrainian grain to drought-stricken African countries. (Source: Bloomberg, New York Times)

If rising energy costs have changed your life or business plans, we’d love to hear more.

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