The global energy crisis is causing a severe squeeze on key markets for oil, natural gas and other fuels. This has resulted in a world that is struggling to keep the lights on and the heat on. As we enter winter, this has led to higher utility bills, more expensive products, and increasing concern about how China and Europe will recover from the COVID-19 epidemic.

Consumers and businesses are already feeling the pinch from rising energy costs and supply chain constraints.

The largest squeeze in Europe is natural gas. Europe imports 90% of its natural gas, largely from Russia. Prices have risen five-fold to 95 euros, from around 19 euros per megawatt hour, and are now at least five times the level they were at the beginning of the year.

The methane price will rise sixfold, pushing up drying costs and putting pressure on the Italian food industry. This could lead to higher prices for bread and pasta in supermarkets. However, meat and dairy aisles are more at risk as beef and dairy farmers have to pay more to dry their grain and pass that cost on to their customers.

Valentino Miotto, from the AIRES association representing the grain sector, said that "from October we are beginning to suffer a lot."

Analysts attribute the gas crunch to a series of events: The economy recovered from the pandemic and demand rose rapidly. The cold winter depleted the reserves. Also, the summer was less windy than normal, which meant that wind turbines weren't able to generate as much energy. Gazprom Russia, Europe's largest supplier, kept extra summer supplies aside from its long-term contracts to replenish winter reserves. China's electric demand is booming back. This has resulted in a shortage of liquid natural gas. Liquid natural gas moves by pipeline, and not ship. The United States also has limited natural gas export facilities.

Oil prices have risen due to higher natural gas prices. Some power generators in Asia are able to switch from oil-based products to gas, resulting in higher costs. The U.S. crude oil price is at an all-time high of $83 per barrel, which is the highest level in seven years. Brent, the international benchmark, is about $85. OPEC and allied countries are cautious about restoring production cuts that were made during the pandemic.

Although the crunch may be short-term, it is difficult to predict how long higher fossil fuel prices can last, Claudia Kemfert of the German Institute for Economic Research Berlin, stated that energy economics expert Claudia Kemfert. She said that the long-term solution is to invest in renewables, energy saving, and she agreed.

Last week, the European Union's executive committee urged member countries to accelerate approvals for renewable energy projects. It stated that the "clean energy transformation" is the best protection against future price shocks and should be accelerated.

Some gas-dependent European industries are slowing down production. German chemical companies BASF and SKW Piesteritz cut ammonia production, which is a key ingredient for fertilizer.

Hermann Greif, a farmer from Pinzberg, Germany's southern Bavaria, was left unexpectedly empty-handed when he attempted to order fertilizer next year.

He said, "There is no product, price or contract." "It's a new situation." He said. It's that simple.

High energy prices were already affecting the region's farmers. They need diesel to run machinery and heat to keep animals heated, stated Greif, who cultivates corn for a bioenergy power plant that emits no emissions into the power grid.

According to the grain association, Italy's energy costs for processing wheat and corn will rise more than 600% over the three-month period ending Dec. 31. This includes the conversion of wheat into flour and corn into feed for cows or pigs.

Giampietro Scusato is an energy consultant who negotiates contracts on behalf of the AIRES association. He expects volatility to continue and high prices will persist in the next year.

Bread and pasta production are also affected by high energy prices. This could lead to higher prices for bread and pasta. Because of low prices, dairy and meat are particularly vulnerable. Farmers may have to pass on the higher animal feed costs to consumers.

Worldwide, people are also facing higher utility bills this winter. Officials in the United States have warned that heating costs could rise up to 54%. The European Union has called for similar assistance.

Weather plays a major role in many things. The gas reserves of Europe, which are usually replenished in the summer, are unusually low.

Massimo Di Oardo, research firm Wood Mackenzie, says that a cold winter in Europe or Asia could lead to European storage levels falling to zero.

This would make Europe dependent on Russian natural gas or Russian willingness to send more through its pipelines across Ukraine. The new Nord Stream 2 pipeline, however, has not been approved by European regulators and will not contribute gas until next year.

According to Kemfert the expert in energy economics, "an intention to place pressure on the early certification Nord Stream 2," Russian suppliers have decided to sell less gas on spot market.

China has seen outages due to high prices of coal and natural gas. Electric companies have been slowing down, despite the fact that they are limited in passing on costs to customers and government orders to keep emissions below acceptable levels.

Mid-September saw factories in Jiangsu, northwest of Shanghai and Zhejiang, southeast, close down. Several warned that deliveries could be delayed in advance of Christmas shopping season.

General manager Joanna Lan stated that the power cut at Chenchen Jewelry Factory in Dongyang in Zhejiang lasted for 10 days. The factory produces hairbands, stationery, promotional gifts, and exports 80%-90% of its products to the U.S. and other markets.

Lan stated that deliveries were delayed by "at least one week." We had to purchase generators.

Shenyang was the largest city in northeast China. It shut down streetlights, elevators, and cut power for a few hours each day to shops and restaurants.

China's imports of gas have increased, but there has been a surge in demand from Japan, South Korea, and Taiwan, which has pushed up global prices. Jenny Yang, IHS Markit research manager, stated that China's gas, power, and energy futures team is experiencing a rise in its gas imports.

Brazil's worst drought in 91-years has led to higher oil and gas prices. This has made it impossible for hydropower plants to provide electricity, and thus, more expensive bills.

Rosa Benta (67-year-old) is from Sao Paulo's working-class neighbourhood and fears that she won't be able provide for her grandchildren and children who are unemployed.

Enel called me several times to inform me that I had a debt. "I told them that I was not going to stop feeding my child to pay you," Benta stated outside her concrete home on a narrow, steep street. They can come if they want to cut the power.

Benta is able to live on 1,400 reais per month (approximately $250). She often has to decide between cooking gas or buying rice and beans.

She said, "I don’t know what we’re going to do with the rest of our lives."