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Worst energy-prices surge since ’73 alarms World Bank

GREATER regional cooperation and efforts to boost supply are needed to combat the worst surge in energy prices since the 1973 oil price spike, according to economists from the World Bank.

In a blog post, World Bank Equitable Growth, Finance and Institutions (EFI) Vice President Indermit Gill and EFI Chief Economist and Director of the Prospects Group M. Ayhan Kose said these are part of a 5-point action plan to address rising commodity prices.

Gill and Kose said oil prices between April 2020 and March 2022, or a 23-month period, led to the largest increase in energy prices since the 1970s. This was largely due to the war in Ukraine.

“The war has delivered the largest commodity-price shock we’ve experienced since the 1970s. It will likely shave a full percentage point off global growth in 2022,” the authors said. “The war has also shifted global patterns of trade, production, and consumption of commodities in ways that might keep prices high for years,” they added.

“Overcoming a global crisis requires global cooperation, of the type that prevailed for the past three decades and from which smaller, poorer countries benefit more,” the economists said.

The World Bank economists said countries should also work toward investing in renewable energy and efforts that would promote energy efficiency. Some of these policies include insulation and weatherization of buildings that protect against both cold and heat. These could also reduce costs for households and improve energy security.

“Over the past two years, a succession of overlapping crises has left governments across the world with little room for maneuver and no margin for error. The choices policymakers make during the next year may well determine the course of the next decade,” Gill and Kose said. BUSINESS MIRRO