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Why a looming copper shortage has big consequences for the green economy

Copper prices have surged in 2021. The base metal remains in high demand, much thanks to its need in green energy projects and electric cars. In May 2021, commodities analysts at Goldman Sachs called copper 'the new oil.' That's because electric cars need several times more copper than their gas-powered counterparts. And power grids getting electricity from wind, solar and hydro sources also need copper—much more than the industry is currently producing. Here's how copper became so important to the world economy, and the green energy revolution.
08:52
Fri, Jul 30 202112:00 PM EDT

Jordan Smith, CNBC.com

This is a chart showing the price of copper, or well, the price of copper futures contracts at the New York Mercantile Exchange over the past two decades. Let's zoom in on 2021. All year copper prices have been surging, just a straight shot higher

Brian Sullivan, CNBC Business News

Copper up more than 30% this year.

David Faber, CNBC Business News

Well, demand for copper has dramatically increased.

Richard Ackerson, Freeport-McMoRan CEO

I'm talking about the fundamental story for copper is a long term, very positive one.

Jordan Smith, CNBC.com

Let's zoom back out. See that big dip but 2008 going into 2009.

Mary Poulton, University of Arizona

Last time, copper prices got high, just before the financial crisis in 2008, 2009, people were stealing copper wires out of homes that were being constructed. They were going into other buildings and ripping out plumbing pipes and copper wire.

Jordan Smith, CNBC.com

Copper has played a big role in the world economy for thousands of years. The Bronze Age? That happened because blacksmiths figured out how to forge copper with tin. Now copper is used in electrical and heating equipment because its chemical properties make it such a useful conductor. It's used in car motors, household pipes, washing machines, all sorts of things we use every day. That's not to mention all the different copper alloys that get mixed into other metals and items. Also, the metal is so easily recyclable that most of the copper on earth remains in the ground. In fact, only about 12% of all copper on Earth has been mined throughout human history, and nearly all of it remains in circulation. Some of the copper in circulation right now could have once been jewelry or armor in ancient Egypt.

So why are smart people like commodity analysts at Goldman Sachs warning about a copper shortage with dire consequences for the world economy?