The world is undergoing a rapid rise in energy prices, the basis of this is a shortage of energy due to recent conflicts such as the Ukraine war, and the obstacles that energy-rich countries and energy traders have faced due to the yearly contract they make. These contracts are being made at a fixed price but with the change in the prices, inflation has occurred. John Kemp, a senior energy market analyst at Reuter, explains that the issue regarding energy is more of a liquidity problem rather than one of solvency. What this means is that the issue is not only one of long-term debt payments, but is also about the ability of a company to sell assets and pay short-term debts back.  Kemp adds that the traders and wholesalers make contracts by taking the risk of price changing, the change can cause inflation in energy trading. The Ukraine war and the sudden rise in gas prices can be an outstanding account of the recent inflations and crises for the great energy companies such as Centrica and undoubtedly the rest of the world.

Like other crises, the reason behind the energy industry crisis is related to the intriguing thought that yearly contracts would be the right path for securing energy trade. However, this has turned out to be a failure. The very high price of energy has elicited further complications.

The Lehman moment is a term that came about in 2008 after the Lehman Brothers became the reason behind the financial crisis in the banking industry. The term refers to one company’s problem becoming everyone’s. It seems that the energy industry of Europe is close to the Lehman moment since the crises of major energy companies have become a worldwide problem affecting everyday life worldwide.