Energy crisis is gaining momentum. Energy costs in OECD countries reach 18% of GDP

Energy spending in OECD countries reaches 18% of GDP – this is close to the highest level in history, repeating the anti-record of 1981. Spydell_finance Telegram channel reports

In contrast to the energy crisis of the 70s, in 2022 the main negative impact is reported to have come from gas and electricity prices. During the energy crisis of 1974, energy costs increased by 8.6 percentage points, of which oil formed 6.5 percentage points. or almost ¾ of the total costs. In the crisis of 2022, the growth in expenses amounted to 7.8 p.p. compared to 2021, where oil contributed 2.4 p.p. 1.86 p.p. (24%), and electricity – 2.54 p.p. (almost 33%).

Electricity spending increased over the year from 2.5% of GDP to 5% – the highest level in history and a third of the increase in total spending in 2022. Gas costs also doubled from 1.8% to 3.7% of GDP – this was not the case before, and the maximum gas expenses were in 1982-1984 and 2008 at the level of 2.3%. A record level of spending was recorded for coal in the structure of GDP – 1.55% against 0.55% of GDP, i.e. tripling over the year. This is significantly higher than the previous record in 1974 (1.24%) and 1.7 times higher than the maximum level over the past 35 years (0.93% in 2012). Oil spending is not a record – 7.45% of GDP. This is quite at the level of 2008 and 2011-2013. Significant, but not critical, while the maximum expenditure was in 1980 (11.4%).

“Energy is a key resource in the economy. Rising prices reduce output, exerting secondary inflationary pressure through a reduction in the supply of goods and services. It also undermines the purchasing power of households, distorting the structure of demand, crowding out spending on other goods and services, as energy is primary. In the future, this will lead to a crisis on the trajectory of cascading production shutdowns and a closed cycle of demand reduction. The scale of the shock is the strongest in 100 years!” the publication says.