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Higher energy prices likely if geopolitical tensions worsen in Eastern Europe

Updated: Feb 3, 2022

By Javan Flowers

“If Russia invades Ukraine, we [Belizeans] are going to feel the pinch,” Daniel Gutierez, energy-industry contributor explained.

In an interview with The Reporter, Gutierrez explained that if Russian energy—which accounts for eleven percent of global supply—is taken off the world market, oil and gas would see an enormous price increase. By extension, all their derivatives, which include Liquefied Petroleum Gas (LPG), diesel, jet fuel, kerosene, and others can likewise be impacted.

He further explained that since we import approximately half of our electricity from Mexico through Comisión Federal de Electricidad (CFE) and their manufacturing process requires fossil fuels, Belizeans can expect the cost of electricity to go up.

Other industries that could be affected include the agricultural sector, as fertilizer requires natural gas, specifically methane, to complete its manufacturing process. He also noted that the increase in the price of diesel, which is used in machinery to harvest crops, could become more costly.

Gutierez underscored that despite how far away this conflict may be, it has far-reaching implications for Belize and nations around the globe and that “we can only hope that diplomacy prevails.”

One related product is gasoline. A February 2nd, 2022 press release announced prices for premium and regular fuel at $12.73 per gallon and $12.28 per gallon, respectively. Last February, premium and regular gasoline were reported at $9.89 and $9.81, respectively. For its part, Diesel is now quoted at $11.56, a figure that is roughly 26% higher than last February’s $9.20 per gallon. Consequently, disruption in supply could push up already elevated prices.

According to international reports, Russia reportedly has around 100,000 troops stationed at Ukraine’s eastern borders. In response, the United States and the United Kingdom have warned Russian President Vladimir Putin that if he chooses to invade, they will unleash “searing economic measures” against Russia, including sanctions on Russia’s largest banks and financial institutions.

Russia, according to the US Energy Information Administration (EIA), is the world’s third-largest oil producer, accounting for eleven percent of global supply.

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