Energy
The Inflation Factor: How Rising Food and Energy Prices Impact the Economy
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How Rising Food and Energy Prices Impact the Economy
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Since Russia’s invasion of Ukraine, the effects of energy supply disruptions are cascading across everything from food prices to electricity to consumer sentiment.
In response to soaring prices, many OECD countries are tapping into their strategic petroleum reserves. In fact, since March, the U.S. has sold a record one million barrels of oil per day from these reserves. This, among other factors, has led gasoline prices to fall more recently—yet deficits could follow into 2023, causing prices to increase.
With data from the World Bank, the above infographic charts energy shocks over the last half century and what this means for the global economy looking ahead.
Energy Price Shocks Since 1979
How does today’s energy price shock compare to previous spikes in real terms?
U.S.$/bbl Equivalent | Crude Oil | Natural Gas | Coal |
---|---|---|---|
2022* | $93 | $170 | $61 |
2008 | $127 | $100 | $46 |
1979 | $119 | $72 | $33 |
*2022 forecast
As the above table shows, the annual price of crude oil is forecasted to average $93 per barrel equivalent in 2022. By comparison, during the 2008 and 1979 price shocks, crude oil averaged $127 and $119 per barrel, respectively.
What distinguishes the 2022 energy spike is that prices have soared across all fuels. Where price shocks were more or less isolated in the past, many countries such as Germany and the Netherlands are looking to coal to make up for oil supply disruptions. Meanwhile, European natural gas prices have hit record highs.
Food prices have also spiked. Driven by higher input costs across fuel, chemicals, and fertilizer, agriculture commodity prices are forecasted to rise 18% in 2022. Fertilizer prices alone could increase 70% in part due to Russia’s dominance of the global fertilizer market—exporting more than any country worldwide.
What are 3 Ripple Effects of Rising Energy Prices?
Oil feeds into nearly everything, from food to smartphones. In fact, the price of oil influences as much as 64% of food price movements.
How could energy and food shocks affect the world economy in the near future, and why is a lot riding on the price of oil?
1. Rising Global Inflation
In 2022, inflation became a global phenomenon—impacting 100% of advanced countries and 87% of emerging markets and developing economies analyzed by the World Bank.
Countries With Inflation Above Target | 2019 | 2020 | 2021 | Apr 2022 |
---|---|---|---|---|
Emerging Markets and Developing Economies | 20% | 20% | 55% | 87% |
Advanced Economies | 9% | 8% | 67% | 100% |
Sample includes 31 emerging markets and developing economies and 12 advanced economies
By contrast, roughly two-thirds of advanced economies and just over half of emerging markets experienced inflation above target in 2021.
This has contributed to tighter monetary conditions. The table below shows how rising inflation in the U.S. has corresponded with interest rate hikes since the 1980s:
Date | Core CPI at Beginning of Cycle | Magnitude of Rate Hikes Over Course of Tightening Cycle |
---|---|---|
1979-81 | 9.3% | 9.0 p.p |
1983-84 | 4.6% | 3.0 p.p |
1986-89 | 3.6% | 4.0 p.p |
1994-95 | 2.8% | 3.0 p.p |
1999-00 | 2.0% | 1.75 p.p |
2004-06 | 1.9% | 4.25 p.p. |
2015-19 | 2.1% | 2.25 p.p |
2022-23 | 6.4% | 2.75 p.p |
2023 is an estimate based on market expectations of the level of the Fed Funds rate in mid-2023. U.S. Core CPI for 2023 based on latest data available.
In many cases, when the U.S. has rapidly tightened monetary policy in response to price pressures, emerging markets and developing economies have experienced financial crises amid higher borrowing costs.
2. Slower Global Growth
Energy price shocks could add greater headwinds to global growth prospects:
Global Growth Scenarios | 2021 | 2022 | 2023 |
---|---|---|---|
Baseline | 5.7% | 2.9% | 3.0% |
Including Fed tightening | 2.6% | 2.4% | |
Including Energy price spike | 2.2% | 1.6% | |
Including China COVID-19 | 2.1% | 1.5% |
Together, price spikes, hawkish monetary policy, and COVID-19 lockdowns in China could negatively impact global growth.
3. Rising Food Insecurity and Social Unrest
Even before the energy price shock of 2022, global food insecurity was increasing due to COVID-19 and mounting inflationary pressures.
Number of People in Acute Food Insecurity | 2020 | 2021 |
---|---|---|
Sub-Saharan Africa | 97M | 119M |
Middle East and North Africa | 30M | 32M |
South Asia | 16M | 29M |
Latin America and the Caribbean | 12M | 13M |
Sustained food shortages and high food prices could send millions into acute food insecurity.
In addition, high fuel and food prices are often correlated with mass protests, political violence, and riots. While Sri Lanka and Peru have already begun to see heightened riots, Turkey and Egypt are also at risk for social unrest as the cost of living accelerates and food insecurity worsens.
Global Challenges
Since World War II, oil price shocks have been a major constraint on economic growth. As the war in Ukraine continues, the outlook for today’s energy market is far from clear as a number of geopolitical factors could sway oil price movements and its corresponding effects.
Energy
5 Ways Nuclear Power Can Enable an Energy Utopia
From clean electricity to high reliability, this graphic explores the five key advantages of nuclear power in the clean energy transition.


5 Ways Nuclear Power Can Enable an Energy Utopia
The phrase Energy utopia describes a hypothetical and sustainable state of the world where energy is clean, affordable, and accessible.
Despite the challenges on the road to achieving an energy utopia, such a state is attainable if the world invests in clean, reliable technologies that can meet our rising energy needs—and nuclear power is one such technology.
This infographic sponsored by CanAlaska Uranium explores five ways nuclear power can unlock a state of energy utopia. This is Part 2 of 4 in the Road to Energy Utopia series.
#1: High Reliability
Nuclear power plants run 24/7 and are the most reliable source of sustainable energy.
Nuclear electricity generation remains steady around the clock throughout the day, week, and year. Meanwhile, daily solar generation peaks in the afternoon when electricity demand is usually lower, and wind generation depends on wind speeds.
As the use of variable solar and wind power increases globally, nuclear offers a stable and reliable backbone for a clean electricity grid.
#2: Clean Electricity
Nuclear reactors use fission to generate electricity without any greenhouse gas (GHG) emissions.
Consequently, nuclear power is the cleanest energy source on a lifecycle basis, measured in CO2-equivalent emissions per gigawatt-hour (GWh) of electricity produced by a power plant over its lifetime.
The lifecycle emissions from a typical nuclear power plant are 273 times lower than coal and 163 times lower than natural gas. Furthermore, nuclear is relatively less resource-intensive, allowing for lower supply chain emissions than wind and solar plants.
#3: Stable Affordability
Although nuclear plants can be expensive to build, they are cost-competitive in the long run.
Most nuclear plants have an initial lifetime of around 40 years, after which they can continue operating with approved lifetime extensions. Nuclear plants with lifetime extensions are the cheapest sources of electricity in the United States, and 88 of the country’s 92 reactors have received approvals for 20-year extensions.
Additionally, according to the World Nuclear Association, nuclear plants are relatively less susceptible to fuel price volatility than natural gas plants, allowing for stable costs of electricity generation.
#4: Energy Efficiency
Nuclear’s high energy return on investment (EROI) exemplifies its exceptional efficiency.
EROI measures how many units of energy are returned for every unit invested in building and running a power plant, over its lifetime. According to a 2018 study by Weissbach et al., nuclear’s EROI is 75 units, making it the most efficient energy source by some distance, with hydropower ranking second at 35 units.
#5: Sustainable Innovation
New, advanced reactor designs are bypassing many of the difficulties faced by traditional nuclear plants, making nuclear power more accessible.
- Small Modular Reactors (SMRs) are much smaller than conventional reactors and are modular—meaning that their components can be transported and assembled in different locations.
- Microreactors are smaller than SMRs and are designed to provide electricity in remote and small market areas. They can also serve as backup power sources during emergencies.
These reactor designs offer several advantages, including lower initial capital costs, portability, and increased scalability.
A Nuclear-Powered Future
Nuclear power is making a remarkable comeback as countries work to achieve climate goals and ultimately, a state of energy utopia.
Besides the 423 reactors in operation worldwide, another 56 reactors are under construction, and at least 69 more are planned for construction. Some nations, like Japan, have also reversed their attitudes toward nuclear power, embracing it as a clean and reliable energy source for the future.
CanAlaska is a leading exploration company in the Athabasca Basin, the Earth’s richest uranium depository. Click here to learn more now.
In part 3 of the Road to Energy Utopia series, we explore the unique properties of uranium, the fuel that powers nuclear reactors.

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