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The Energy Price Roller Coaster

In the longer term, oil and gas prices look set to rise unless investment picks up sharply, which seems unlikely given current policy guidance. Giant waves of supply and demand shocks will likely continue to roil energy markets and the global economy.

CAMBRIDGE – Over the past two and a half years, world oil and gas prices have been subject to demand shocks and supply shocks – and sometimes both simultaneously. The resulting volatility in energy markets is both a reflection and a microcosm of a careening global economy.

The price of Brent crude oil declined from a “normal” $68 per barrel at the end of 2019 to $14 per barrel in April 2020 as the COVID-19 pandemic spread worldwide. Two years later, in March 2022, the price soared to $133 per barrel after Russia invaded Ukraine. Now it is falling again amid growing fears of a recession in the United States. But the price could rise sharply if the Chinese economy bounces back from the stupor induced by its zero-COVID policies.

What will happen next, and how can policymakers keep their eye on environmental sustainability in the face of this market turmoil?

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