Why your electricity bill is surging

EMA Why your electricity bill is surging Wooow. My electricity bills these few months are just scary... what's going on? Well... Global energy prices are getting more expensive, and you can expect it to go up further. Why? Who raised my electricity bill? It's not so much WHO, but rather WHAT Think of the amount of energy as a pie. Every year, a limited amount of energy is produced for the entire world. Countries compete for a slice of the pie. When the pie shrinks, prices of pie go up. Same if they're hungry. When there's too much pie, or people are not hungry, then prices go down. In the past two years, there were several factors that made the pie more expensive. Factor 1: the pandemic At the start of the pandemic, energy consumption slowed. There was plenty of fuel to go around, BUT few wanted to buy it. In response, fuel producers reduced investments and production. To use the pie analogy, there was too much pie, and few were hungry (for lots of energy, that is). Pie prices hit rock bottom - the lowest in over 18* years! But as the world slowly opened up, people started to need more energy again. Once again, people were hungry for pies. But here's the thing: it was hard to get energy supplies back up to pre-COVID levels. Once you stop energy production, it's hard to get it up so quickly again. As a result, the world was left with many hungry people and too little pie. Factor 2: extreme weather For quite a while now, extreme weather has made the production of energy difficult. Heat waves, storms and cold winters, for example can wreck havoc on renewable energy production, electricity infrastructure, fuel delivery infrastructure and equipment, power plants and storage facilities Extreme weather can also make people hungrier for the energy pie. The summer of 2021 was Europe's warmest summer, which made people consume lots of fuel for air conditioning. In turn, this led to a shortfall of fuel for winter that year. In all of these circumstances, extreme weather both: 1) reduced the size of the pie 2) made people hungrier for pie Factor 3: global conflict Finally, the recent Russia-Ukraine conflict is also a factor. Many countries are reducing their reliance on Russian energy sources. Imagine the entire world refusing to eat the Russian part of the pie - the other section now becomes more expensive! All of these demand & supply factors have combined to create the perfect storm. And that's how you ended up with your bill. Why would it affect us so much? COVID I understand. But some of these things happen so far away from Singapore. We might be far away. But we buy your energy from the same market. And we're a PRICE TAKER. Price-taker? What does that mean? Well, Singapore hardly produces any energy. Neither do we buy enough to bargain for discounts. This means we have to take the prices offered to us. On the other hand, large, powerful countries which buy and sell energy are price-setters. They set the prices and the rest of the world follows. Okay, but why not the government just subsidise? Subsidising energy indiscriminately just beenfits people who consume more. It also ignores that we should ALL be cutting down on energy consumption. Aiya, talk so much. Means that there's nothing we can do. Well, if you think that way for yourself, then I suppose it'll come true. The way I see it, we can do several things after understanding the big picture. From an individual's perspective, use electricity more prudently to prevent wastage. From Singapore's perspective, identifying possible weaknesses help plug them early. 1. Diversify energy imports 2. Develop other energy sources i.e. solar, and low-carbon technologies Finally, from a global perspective, we can zoom out and understand Singapore's position in the supply chain. This issue is bigger than all of us, and the energy crisis is affecting millions of people worldwide. Yes, this is not a good situation. So you have every right to feel upset. But understanding the big picture will help you direct energy and emotions towards things you can actually control. Be aware of the macro so that you may have a tolerable micro.. Stay woke, salaryman.

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3 replies to “Why your electricity bill is surging”

Reshmi says:

June 30, 2022 at 10:26 am

Amazing article.

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Vivian says:

July 5, 2022 at 5:50 pm

The last conclusion is aptly put – Be aware of the macro so that you may have a tolerable micro.

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Beth Howard says:

November 9, 2024 at 7:26 pm

Great post! I really appreciate how you laid out the reasons behind the surging electricity bills. The breakdown on how global oil prices and increased demand are impacting our pockets hits close to home, especially for those of us trying to budget with rising costs everywhere. It’s wild how even the smallest changes, like more people working from home, can shoot our bills up, right?

So here’s my question: What’s the one change you’ve made to cope with these rising bills that’s actually made a difference for you? I ask because it would be cool to gather real-life tips from everyone—like, some of us might be struggling with the same issues and could definitely use some hacks to save a few bucks. Plus, sharing our experiences can help us all feel more connected in this crazy climate!

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3 replies to “Why your electricity bill is surging”

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