Energy prices rose 59% in 2021

According to a new report from the Energy Information Administration (EIA), energy prices were 59% higher at the end of 2021 than at the beginning of the year.

The boom in energy prices - which was stronger than the gains in other commodities - was largely the result of the economic recovery from the Covid-19 pandemic. Most of the other commodity prices on the S&P Goldman Sachs Commodity Index (GSCI) rose about 20%, with the exception of precious metals, which saw a decline.

Within the energy part of the commodity index, which shows the development of the global commodity markets, RBOB (wholesale gasoline) recorded the largest increase with 67%, followed by heating oil, WTI and Brent. Gas oil and natural gas rounded off the energy segment of the GSCI.

WTI and Brent were up 62% and 55%, respectively.

Factors that pushed energy index prices up included weather-related disruptions (including the February frost and Hurricane Ida), as well as increased demand for gasoline and diesel and higher demand for crude oil and natural gas that outpaced production.

The Covid-19 pandemic pushed investment in oil and gas to near-record levels and widened the gap between crude oil supply and demand.

In the week ending December 24, the last week the EIA reported, crude oil production in the United States rose to 11.8 million bpd, up from 13.1 million bpd in March 2020 when the demand crunch was not yet recognizable on the market.

Ironically, it is precisely these spikes in energy prices - in the United States and elsewhere - that could hold back further economic recovery.