Volatile energy prices are squeezing household costs and business productivity in Europe. In response, some companies may move production out of Europe to regions with lower energy prices.
In Europe, soaring energy prices have led to production declines in energy-sensitive industries over recent months. As a ripple effect, European fertilizer production capacity has decreased as much as 70%, crude steel capacity has fallen 10%, and aluminum and zinc production capacity has sunk 50%.
In response, some companies may move production out of Europe to regions with lower energy prices. This occurred in 2010-2014 amid high European energy prices, where companies relocated to the U.S., the Middle East, and North Africa.
While energy prices have fallen in recent months, several factors could influence price volatility looking ahead:
Russia slashing energy supplies
Rising winter heating demand
Shrinking European storage facilities
In the infographic from New York Life Investments, we show the potential impacts of Europe’s energy crisis on consumers, businesses, and the wider global economy.