THE earthquake in Japan is a heartbreaking human tragedy. It is also a clear indicator of the interconnectedness of global energy infrastructure, and could affect energy prices here in the Kingdom of Tonga. Luckily, Tonga has a plan in place that could lead the world in finding solutions.
But first the problem. Once the damage to the Fukushima nuclear plant was obvious, global oil prices reacted quickly. While price is also affected by events in the Middle East, speculators seem to be assuming that, with its nuclear power generation impaired, Japan will have to import more oil and gas. And so prices looked up.
If the disaster causes a global rethink of nuclear power (already Germany seems to be moving away from nuclear and China is cautious), this could cause a long-term rise in oil and gas prices – something that is not good for a country like Tonga where close to 100% of the electricity is currently diesel generated.
