The spike has forced some fertilizer producers in Europe to reduce output, with more expected to follow, threatening to increase costs for farmers and potentially adding to global food inflation. In the U.K., high energy prices have forced several suppliers out of business.
Even a normally cold winter in the Northern Hemisphere is expected to drive up natural gas prices further across much of the world. In China, industrial users including makers of ceramics, glass, and cement may respond by raising prices; households in Brazil will face expensive power bills. Economies that can’t afford the fuel—such as Pakistan or Bangladesh—could simply grind to a halt.
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In Asia, importers of liquefied natural gas are paying record prices for this time of year to secure supplies, with some starting to snap up dirtier fuels such as coal and heating oil in case they don’t obtain enough. This may undermine efforts by governments to hit ambitious green goals: Gas emits about half as much carbon dioxide as coal when burned.
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China, the world’s biggest buyer of natural gas, hasn’t filled stockpiles fast enough, even though imports are almost double what they were last year, according to customs data. Several Chinese provinces are already rationing electricity to industries to meet President Xi Jinping’s targets for energy efficiency and pollution reduction. A power crisis could exacerbate shutdowns if authorities divert gas to light and heat households.
If Chinese factories have to contend with widespread power shortages, global prices for steel and aluminum will jump. To make matters worse, the country is also grappling with a coal shortage.
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