Publications: Notes at the Margin

Implications of the 2022 Economic Recession or Depression for Energy Markets (October 11, 2021)


Our report title this week is intentionally provocative. The global economy will fall into recession or worse in 2022, thanks to high energy prices. Yet, no one seems to have noticed.


Last Thursday, Bloomberg posted a video interview of Amrita Sen of Energy Aspects with the headline “Analyst Sen Sees Energy Prices Staying High for Years.”[1] Taking the title on face value—we wasted no time watching the clip—one recalls the prediction made in Energy Future by Robert Stobaugh and Daniel Yergin in 1979: “Indeed, higher oil prices seem assured for the future, with the only questions being how soon and how high.”[2] At the time, a barrel of oil fetched more than $40. Six years later, the price fell to less than $10. Sen’s projection will suffer the same fate.


Indeed, almost all those commenting on oil prices see high prices continuing for an extended period. If one listened to any of the recent Energy Intelligence Forum sponsored by the Energy Intelligence Group, one heard nothing but forecasts of high prices. Furthermore, speakers such as OPEC’s head Mohammed Barkindo almost demanded that investors pour more money into oil companies to promote increased exploration. The threat of very high prices seems real in their minds.


Sadly, those working in or following oil and energy seem to inhabit a different universe than the other 99.9 percent of the world’s population. High coal, oil, and natural gas prices will bring about a prolonged global recession, if not a depression. To put this in context, oil prices would have to rise by $225 per barrel to have the same economic impact alone as that of the combined fuel cost increases. Fossil fuel use will be much lower when the world emerges from the downturn. Based on history, the coming energy-caused downturn will be severe, perhaps worse than the Great Recession that began with Lehman Brothers’ failure in 2008.


Again, no one seems to have noticed.

[1] “Analyst Sen Sees Energy Prices Staying High for Years,” Bloomberg, October 7, 2021 [].

[2] Robert Stobaugh and Daniel Yergin (eds.), Energy Future: Report of the Energy Project at the Harvard Business School (New York: Random House, 1979) [], p. 4.


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