The spring edition of Kieler Konjunkturgespräche takes a closer look at global energy markets and related policies.
Prices for energy have been on a remarkable rollercoaster ride, particularly for natural gas and electricity in Europe. A complex set of factors contributed to this, with Russia’s war of aggression in Ukraine at its centre. Sharply declining Russian energy exports, inelastic supply in the short run from other energy producers, subsidies to alleviate hardships for households and firms in many energy importing countries pushed global energy prices to formerly unseen levels. As of lately, energy prices have receded to more moderate levels, but remain elevated. Against this backdrop: What developments on global energy markets can we expect in the short and medium term? What does this imply for the inflation outlook? How do energy supply constraints – or unusually high energy prices – affect the prospects for potential GDP and economic growth? Looking forward, what energy mix will major economies rely on in the future, and from which sources? Will Russia be able to become a trusted energy supplier again at some point once the war is over? To what degree will the pending decarbonization of the world economy render large chunks of the energy infrastructure and supply networks to become stranded assets? Are temporary energy price surges sufficient to trigger the necessary long-term investments in energy infrastructure, or is there need for governments to step in with subsidies or public investments? The 106th KKG discusses global energy markets and energy policies now and beyond, in addition to the most recent economic outlook for the heavyweights of the world economy.