Consumers hit as global gasoline prices soar

Inflation fears

These findings were part of the World Bank's Commodity Markets Outlook released on Oct 21.The report said the scenario might trigger a surge in global inflation that could lead to prices of agricultural produce following suit. This could also increase concerns about food security in developing countries.

Reuters quoted Ayhan Kose, chief economist and director of the World Bank's Prospects Group, as saying, "The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries.

"The sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year's global recession."

In Europe, increased demand for energy due to falling temperatures has put pressure on some countries that are poised to potentially break their climate change promises as they consider using coal during the gasoline shortage.

Frans Timmermans, European Commission executive vice-president, told Reuters: "It will be a tragedy if, in this crunch, we start investing again in coal, which is an energy that has no future and is extremely polluting. The smart thing to do during this energy crisis is to reduce as soon as possible your dependency on fossil fuels."

De Haan said: "The US has made it clear that moving forward, they will move to clean energy. Of course, that then will mean that prices may remain elevated for some time, because of the cost of transitioning to cleaner energy, whereas China may have lower costs upfront as it looks, at least for now, to stick with some of these coal power plants that are new.

"But I'm sure China and the US are both aligned in the fact that, you know, in the decades ahead, they will likely move away from fossil fuels and toward cleaner energy."

Reuters contributed to this story.