Commodities crisis and repercussions of rising prices

2 min. reading
Digital economy, E-mobility, Gaming and eSports / 10 May, 2022
Commodities crisis and repercussions of rising prices

Karla García Gil Journalist

The SARS-CoV-2 pandemic and the worldwide increase in the cost of services such as transportation have had a significant impact on the economy. This, among other things, has led to shortages of raw materials.

This crisis has also been caused by the centralization of supplies by some world powers. For example, China has had to immobilize some materials to guarantee its own consumption and that of its trading partners, which is causing shortages in international markets.

Among the sectors affected are lithium, a necessary element for the automotive industry; semiconductors, indispensable chips for the manufacture of technology; the livestock and mining sectors.

Semiconductor crisis and its effects

Semiconductor crisis and its effects

The production of chips is among the most complex processes in existence, taking several months and hundreds of stages in its manufacture, in addition, it requires precision equipment that operates subatomic particles.

Gasoline, gas and energy

In the case of fuels, the price of gasoline has reached historic highs, especially in the United States, where it reached 4,173 dollars per gallon, a price that had not been seen since 2008, when the cost reached 4,114 dollars. This has caused a rise in the prices of international transportation and, therefore, the increase in the price of supplies and even their shortage, which has put the existence of many physical and even online stores in jeopardy.

Thus, we also find an increase in the price of energy, whose main reason is the contraction of wholesale gas prices globally, caused in large part by the rapid pace of economic recovery following the pandemic, which has caused demand to soar, creating greater pressure on global supplies.

Shutdowns during the contingency period delayed some maintenance work, which affected supply so that demand outstripped production capacity. The impact has been particularly severe in the UK and Norway.

The picture is further complicated by the advent of the Russian invasion of Ukraine, which has caused Germany to block approval of the Nord Stream 2 pipeline in retribution to Russia.

The consequence of all the above factors together is that international gas prices have risen by 250 percent.

One way to alleviate the shortage and/or the increase in gas and electricity prices is the use of alternative energy sources, such as renewable energy, which would allow families to be sustainable and generate their own energy through sources such as solar panels, to mention just one example.

Regarding the crisis of raw materials, the implementation of the circular economy could be functional, this in a search to reduce the inputs used in production and obviously to be able to recycle or give a second use to the products in their final stage of life.

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