Explained | Global energy shortage or a coincidence of regional crises?

Here is a summary of what is disrupting energy markets:

CHINA CRUNCH

Beijing has begun rationing electricity to energy-hungry businesses because of a crunch in coal supply triggered by stepped-up safety checks at Chinese mines which dragged output below year-ago levels for much of the first half of the year.

The lower coal production in turn fuelled a steep climb in local thermal coal prices, which have scaled successive record highs this year and are up over 80% year-to-date.

Because Beijing sets power prices, coal-fired power plants have been unable to operate economically with such high coal costs, and are shutting down.

Goldman Sachs estimated that as much as 44% of China's industrial activity has been hit by the power shortages.

The China Electricity Council, which represents power suppliers, said on Monday that coal-fired power companies were now "expanding their procurement channels at any cost" in order to guarantee winter heat and electricity supplies.

But coal traders have said finding fresh import sources may be easier said than done, with Russia focusing on serving Europe’s power needs, rains interrupting output from Indonesia, and trucking constraints hindering imports from Mongolia.

EUROPE'S POWER BILLS

The price of keeping the lights on in Spain has tripled, reflecting a broader spike in power bills across the EU in recent weeks. The surge in electricity costs has raised fears of a difficult winter ahead as households demand heat and push consumption to a seasonal peak.

The reason for rising costs in Europe is a confluence of local factors, ranging from low natural gas stockpiles and overseas shipments, lacklustre output from the region’s windmills and solar farms, and maintenance work that has put nuclear generators and other plants offline.

The timing is tough as demand is expected to rise in the coming months, but the return of power plants from maintenance and the startup of the recently completed Nord Stream 2 gas pipeline from Russia to Germany could eventually ease markets.

In the meantime, Spain, Italy, Greece, Britain and other others are planning national measures, ranging from subsidies to price caps, aiming to shield citizens from rising costs as economies recover from the COVID-19 pandemic.

UK PETROL STATIONS RUN DRY

Panic-buying by motorists has left fuel pumps dry across major cities in one of the worst energy disruptions facing Britain in decades. Fights have broken out at filling stations as the government urged calm.

But the problem is not a lack of gasoline, it is a lack of truckers to get it from refineries to retailers – one of the odd side-effects of Britain’s EU exit and a hangover from postponed trucker certification and training during the pandemic.

The fix? Prime Minister Boris Johnson's government has been issuing temporary visas to thousands of foreign truck drivers to get fuel to market, has put the army on standby to help out, and hopes to restore order at the pumps before the holidays.