Top economist Kenneth Rogoff has stated that the supply and demand imbalance caused by the pandemic continues to roil the energy market, leading to rollercoaster-like fluctuations in oil and natural gas prices.
The Harvard professor and former Chief Economist of the International Monetary Fund pointed out that in the past few years, oil and natural gas prices have experienced severe fluctuations. Following the outbreak of the pandemic, energy prices plummeted, and then surged after the Russia-Ukraine conflict.
In 2020, Brent crude prices temporarily dropped to $14 per barrel, only to peak at $133 per barrel in June 2022. Similarly, U.S. natural gas prices saw fluctuation. According to the U.S. Energy Information Administration, in 2020, U.S. gasoline prices dropped to a low of $1.77 per gallon, and then reached a peak of around $5 per gallon in 2022.
In recent months, energy prices have slightly declined, with Brent crude prices at around $80 per barrel and natural gas prices around $3 per gallon. This is mainly due to concerns over an impending economic recession in the U.S. and its potential impact on demand. However, in the long term, it is expected that oil and natural gas prices will continue to trend upwards as the unprecedented impact of the pandemic continues to sweep through the market, leading to continued significant fluctuations in prices.
According to the U.S. Energy Information Administration, global oil demand increased by 230,000 barrels per day last year. By 2050, global oil demand could soar by 42%.
An increasing number of energy giants are investing in boosting crude oil production, and the U.S. is expected to see mergers and acquisitions in the energy sector surpassing $100 billion in 2023. However, some experts warn that these investments may take several years to address the industry’s long-standing supply shortages, meaning prices may temporarily rise.
Rogoff stated, “In the long term, unless investments significantly increase, energy prices will continue to rise. Supply and demand shocks are likely to continue to disrupt the energy market and the global economy.”
