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Energy Transition: A Jarring Path to Green

Higher energy prices may prompt more investment in energy transition technologies, but we expect periods of volatility and vulnerability along the path to a greener future.

Over the last year, a sharp rise in energy prices – including natural gas, coal, and oil – has contributed to renewed fears that higher input costs could constrain industrial production, reduce household real incomes, and slow economic activity. Relative to pre-pandemic levels, global crude oil prices are now up roughly 50%.

In a historical context, this is not uncommon: Since the 1990s, the year-over-year increase in oil prices has exceeded 50% roughly once every three years. In the U.S., while fears that higher energy prices will act as a regressive tax on consumers are warranted, the overall burden from higher oil prices is still considerably below past peaks.

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The Author

Greg E. Sharenow

Portfolio Manager, Commodities and Real Assets

Tiffany Wilding

Economist

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