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Rallying energy commodity prices are expected to drive up primary energy expenditures globally to a record 13 percent of world gross domestic product (GDP), comparable to the energy cost levels in the 1979-80 energy crisis, research consultancy for energy technologies Thunder Said Energy said in a report on Wednesday.
The expected record 13-percent energy expenditure would be three times the average level of 4 percent between 1900 and 2020, and 1.3 times the 2018 levels, the consultancy noted.
Since the beginning of the 20th century, primary energy expenditures have averaged 4 percent of global GDP, rising to 8 percent after the first oil shock, 13 percent after the second oil shock, 10 percent in 2008, and 8-10 percent in 2013-2015, when prices were high.
Source: Thunder Said Energy
The estimate of a record energy expenditure as part of global GDP assumes prices of $250-$300 per ton of coal, $125-$150 per barrel of crude oil, and $40-45/mcf price of global natural gas, Thunder Said Energy noted.
"So this is not an 'oil shock' or a 'gas shock' but an 'everything shock'," Rob West, Analyst & CEO at Thunder Said Energy, wrote in the report.
Crude oil, natural gas, and coal prices had rallied even before Russia's invasion of Ukraine, but the war premium sent earlier this month prices of coal and natural gas to all-time highs, while crude oil prices hit a 2008 high last week of above $130 per barrel.
"Curtailing demand is the only short-term option to alleviate shortages," West said, adding that "There are no good options here, only 'less bad' ones."
Thunder Said Energy, like many other analysts and industry officials, shares the concerns about underinvestment in conventional energy in recent years, especially in light of the fact that fossil fuels still provide around 83 percent of total energy demand globally.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.