- Even though mild winter weather has helped stave off a crisis, economic pain is spreading from Maine to Tokyo.
According to Bloomberg article published on February 10, 2023, people around the world are taking drastic steps to cope with rising energy costs: bubble-wrapping their windows, skipping showers and sitting in the dark.
Despite a mild winter in places like New York City and London, the global energy crisis is hammering people who are grappling with inflation that is driving up the cost of pretty much everything. On Friday, Russia said it would cut its oil output by 500,000 barrels a day next month in retaliation for western energy sanctions, sending oil prices higher.
Even before Russia’s invasion of Ukraine sent consumer energy bills soaring, a jump in post-pandemic demand and the transition to renewables had made the world’s energy system more fragile and prone to shock. Energy prices in 2023 were already expected to be 75% above their average over the past five years, even if, as forecast, costs moderate this year compared to 2022, according to the World Bank.
The IEA estimates the number of people living in households that spend at least 10% of their income on energy increased by 160 million between 2019 and 2022, contributing to inflationary pressures and the looming risk of global recession. At greatest risk are the estimated 75 million people worldwide who recently gained access to electricity and are now likely to be unable to pay for it, according to the International Energy Agency. That would mark the first time the number of people without power has climbed since the organization began tracking it 20 years ago.
“The world is in the midst of its first global energy crisis — a shock of unprecedented breadth and complexity,” said IEA executive director Fatih Birol.
Bloomberg News spoke to consumers in five countries where prices have surged about the impact on their finances and what they’re doing to make ends meet.
Germany
Germany depended on Russia for more than half of its gas imports before the invasion of Ukraine, making it especially vulnerable to an energy shock. Although prices have moderated from their highs in 2022, the average energy bill was still up about 60% in January from two years ago, according to German data site Check 24.
Tyrone Stallone, a comedian in his 30s who lives in a one-bedroom rental in Berlin, has stopped going out with friends so he can save enough money to pay his energy bills, which in recent months have surged more than 10-fold to €80 ($86) a month. Skipping showers, wearing extra clothes and turning off the lights as often as he can have become part of his routine.
“It’s just insane. I’ve never experienced anything like it,” he said.
Europe’s energy crunch will likely contribute to a mild recession in Germany this year, according to the country’s economy minister, although it is expected to avoid the sharper downturn that was previously forecast. The country plans to spend €83.3 billion on gas and electricity subsidies this year to help consumers weather surging costs.
US
Of all the regions of the US, New England has been hit hardest by energy price hikes. Average consumer electricity prices were up 20% in November from a year earlier, according to the US Energy Information Administration, and are forecast to hit a winter peak of more than $200 per megawatt hour, well above the estimated national average of $60 to $80.
In Auburn, Maine, where temperatures plummeted to -15F (-26C) last weekend, Candice Northrup is down to the last dregs of heating oil in her tank and is worried it will run out in the middle of the night. The cost to refill it — $775 for 200 gallons — is about double what her family of four paid last year, and will last about six weeks if the weather cooperates.
“If it’s frigid, we’ll go through that in a month,” she said. “Energy costs in Maine are just impossible for the average middle-class family.”
To cope, they’re setting the thermostat to 62F at night and using electric blankets and hot-water bottles in bed to keep warm.
It’s not just New England: In New York City, natural gas prices surged to the highest since 2003 during a cold snap earlier this month, and city energy provider Con Edison warned residential customers in January that a typical bill would jump 12% from the month prior. In California, residents who rely on gas have complained of monthly energy bills approaching $800.
Around a quarter of US households reported foregoing basic household necessities like medicine and food in order to pay an energy bill during at least one month in the past year, according to December Census survey data. Among households that make less than $35,000 per year, that number is more than 50%; for households of color, it’s nearly 30%.
UK
Claire Blaney is living week to week.
The 39-year-old, who lives in the West Midlands region of England, is paying about as much as £50 ($60) each week just for heat. Including electricity, her energy bill has quintupled from last winter to about £300 a month.
Blaney recently lost her husband to Covid-related complications and relies on government benefits to get by. She’s been struggling to find the money to feed her cats and wash her clothes, and keeps the thermostat set to a frigid 11C (52F) to lower her bills.
“Energy costs this winter are astronomical. It’s just madness,” she said. “If I could just sort this out, I could finally have some breathing room.”
UK electricity prices rose more than 65% and gas prices more than doubled in the 12 months to December, according to the Office for National Statistics.
The UK government implemented a price freeze that it says will keep the typical household’s annual energy bill at £2,500 this winter, but that will expire in April, when costs could almost double.
The end of the government’s price cap could send an extra 4 million households into fuel poverty come spring, according to estimates from the End Fuel Poverty Coalition. That’s in addition to the 7 million already in that situation.
Japan
Turn off your toilet warmer, put on a turtleneck and huddle together in one room to watch TV: That’s the advice Tokyo residents are getting to conserve power. Japan, which imports most of its energy needs, narrowly avoided blackouts in its capital city last year and is experiencing a renewed squeeze on supply this winter.
Jason Thorn, who lives in Koriyama about 150 miles north of Tokyo, uses bubble wrap to reduce his bills and stay warm. The 36-year-old, who details his tips for surviving winter on YouTube, taped it to his windows — which are single-glazed — and the front door of his poorly insulated apartment.
“It's been incredibly cold,” said Thorn, who teaches English and is originally from Watford, UK. “I keep finding areas in this old apartment that I live in where there are drafts.”
Like many other consumers in Japan, Thorn is also facing a potential power bill hike — a rare occurrence in the nation, where regulations cap rate increases.
Several utilities — including the country’s biggest electricity provider, Tokyo Electric Power Co. — have sought government permission to raise rates for households. If granted, it will be the first time Tepco has done so since September 2012.
Thorn said Tepco recently placed a slip of paper under his door explaining the potential price hike. If it gets its way, his bill could rise as much as 30% from June, he said.
Australia
It’s been a relatively cool summer in Australia, reducing the need for air conditioning, but there’s still an energy crunch. Before Angela Finch takes a shower, puts on the washing machine, or does any number of simple household tasks, she pauses and tries to calculate how much energy it will use.
“I think, ‘How much will it cost to turn the oven on tonight? Can I afford to do that or should we have something that is much cheaper to heat up?’” said the 42-year-old from Hobart in Tasmania, an island about 150 miles south of the Australian mainland.
The single mother of three daughters has watched her electricity bill climb, even though she has made every effort to use less power. It’s meant making tough decisions such as not having family over at Christmas and not letting her children invite friends to play because having guests means using more power.
Although Australia is one of the world’s largest exporters of liquefied natural gas, the rush to supply other countries in the wake of the Ukraine war left domestic consumers with a fuel shortfall and led gas bills to rise by as much as 27%.
And it’s set to get worse. The government’s budget in October forecast electricity prices will increase at least 50% by June 2024, and gas prices are expected to rise more than 40% over the same period.
The number of people with energy debts of A$2,500 ($1,700) or more increased by 39% in 2022, said Cassandra Goldie, chief executive officer of advocacy organization Australian Council of Social Service.
Finch is one of the people falling behind on her energy bills, despite trying to keep costs down.
“I don’t go out, I go to bed early,” she said. “I sit in the dark once the kids are asleep.”
