Energy prices have risen dramatically since Russia’s invasion of Ukraine and could push as many as 141 million people into extreme poverty, a new study has shown. The costs of goods and services have also gone up due to higher energy prices.
According to experts, it is likely that household energy costs will go up by 62.6 to 112.9 percent, a press release from the UK’s University of Birmingham said. This rise in the cost of energy will add to a 2.7 to 4.8 percent increase in household spending and the cost of living that could thrust from 78 to 141 million people around the world into extreme poverty.
“High energy prices hit household finances in two ways. Fuel price rises directly increase household energy bills, whilst energy inputs needed to produce goods and services push prices up for those products as well and especially for food, which affects households indirectly,” said corresponding author and Associate Professor in Sustainable Transitions at the University of Birmingham Yuli Shan in the press release.
The Russia-Ukraine conflict — ongoing since late February 2022 — has caused global energy prices to skyrocket. Due to the war, countries reliant on Russia for oil and gas have faced fuel shortages in addition to high import costs.
The international research team — consisting of experts from the Universities of Groningen, Maryland and Birmingham, plus the Chinese Academy of Sciences — looked at how escalating prices affected households in 116 countries.
The study, “Burden of the global energy price crisis on households,” was published in the journal Nature Energy.
The researchers said many people would need help with food and other necessities, as well as energy aid, during the present crisis.
“Due to the unequal distribution of income, surging energy prices will affect households in very different ways. Unaffordable costs of energy and other necessities will push vulnerable populations into energy poverty and even extreme poverty,” Shan said in the press release.
The researchers compared total household expenditures, including recent added energy costs, to cost burdens before the energy crisis and found marked differences within different countries. The differences were due to the dependence on fossil fuels in global supply chains and the consumption patterns of various households.
The researchers found that more of the energy cost burden in low-income countries falls on wealthier households. In high-income countries, poorer households are inclined to be burdened with higher energy rates. Countries in Sub-Saharan Africa had the biggest total energy cost burden.
“This unprecedented global energy crisis reminds us that an energy system highly reliant on fossil fuels perpetuates energy security risks, as well as accelerating climate change,” Shan said.
Worldwide, expenditures in poorer households are generally focused on meeting daily necessities like energy and food, while the energy costs for wealthier groups are increased on high-value goods and services.
“Understanding how global energy prices are transmitted to households through global supply chains and who is more affected is crucial for effective and equitable policy design,” said corresponding author and Professor in Science, Technology and Society at the University of Groningen in the Netherlands Klaus Hubacek in the press release.
The global cost-of-living crisis has caused rising inflation and thrust economies into recession.
“This crisis is worsening energy poverty and extreme poverty worldwide. For poor countries, living costs undermine their hard-won gains in energy access and poverty alleviation,” Hubacek said, as The Guardian reported. “Ensuring access to affordable energy and other necessities is a priority for those countries, but short-term policies addressing the cost of living crisis must align with climate mitigation goals and other long-term sustainable development commitments.”