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2022’s energy price convulsions did not start with Ukraine and Western sanctions against Russia. Another Russian neighbor, Kazakhstan, ushered in the year with protests triggered by higher fuel prices. These protests escalated into violence and rioting and sparked a brief Commonwealth Security Treaty Organization intervention, led by Russia.
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As climate change shifts from a “far-off problem” to “eminent threat” in public perception, governments and billionaire philanthropists scramble to mitigate the impacts of global warming. Geoengineering, the radical transformation of the environment and ecosystem, has been an object of considerable interest. There are two main approaches to man-made climate intervention: Aerosol geoengineering, the spraying of particulates into the atmosphere to partially block the sun, has dominated discussions, while aquatic geoengineering remains comparatively unknown.
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On November 27-28 a conference in Paris addressed a broad spectrum of challenges humanity is facing. Renowned thinkers, including Nuriel Roubini and Jacob Frenkel, the former Chairman of JP Morgan International, and three central bankers from Iceland, Tunisia, and Armenia, warned about inflation and the growing mountain of debt threatening the global economy. The panel at which this author addressed civilian nuclear security was organized by Dialogue of the Continents, a project of the Astana Club, the brainchild of the Nazarbayev Foundation. The panel was chaired by the veteran nuclear policy expert Ambassador Kairat Abusseitov, the former First Deputy Foreign Minister of Kazakhstan.
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China has again taken center stage with a string of groundbreaking events that will define its policy course for years to come – both domestically and internationally. The CCP’s 20th Party Congress bequeathed Xi Jinping a historic third term as President, but extreme economic turmoil and COVID protest have resulted in a chink in his political armor.
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Europe’s winter – likely to be warmer than average – is a welcome relief for a continent that was facing existential energy supply problems a few months ago. Those problems still exist, and many Europeans are suffering due to the avoidable problems associated with overreliance on Russian gas. Thankfully, the window in which Russia could have leveraged its energy control for a favorable political resolution in Ukraine may be getting smaller. Winter is here, and Europe endures, although not without hiccups.
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Peak oil, a hypothetical point when global oil production maximizes and enters an irreversible decline, has been the holy grail of resource economics for decades: prized and just as elusive. Recently, technological development including increased digitization has altered conventional understandings associated with “peak oil”. Like other consumable resources, peak oil is grounded in reality: Oil is a finite natural resource produced over a geological timespan whereas demand continues to climb. However, peak oil could also become a self-fulfilling prophecy, inadvertently misinforming the public.
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The midterm elections’ “red trickle" has not curbed some Democrats’ enthusiasm to begin proposing controversial legislation. One of the most divisive and consequential is the proposed windfall tax on energy companies. Proposals from Senator Sheldon Whitehouse (D-RI), Senator Elizabeth Warren (D-MA), and Representative Ro Khanna (D-CA) have gained the tacit support of President Joe Biden but are unlikely to pass congress. Washington does what it does best: political theater and posturing. However, just because a bad idea isn’t translating into policy, doesn’t mean it’s not worth refuting.
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The COP27 conference which wraps up in the Egyptian resort of Sharm-el-Sheikh featured dire environmental predictions. Secretary-General of the United Nations António Guterres warned world leaders we are “on a highway to climate hell with our foot still on the accelerator”. This has prompted an array of responses of varying efficacy, including carbon offsetting on a global scale. Carbon offsetting is the process of mitigating carbon emissions by creating carbon sinks elsewhere to compensate for emissions that cannot be cut (For example, planting X trees per Y amount of CO2). Locally, carbon offsetting is a vital element of sound environmental policy. Internationally, carbon offsetting takes on dangerous unintended characteristics of a taxpayer-funded boondoggle.
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Liquefied-natural gas (LNG) is a bridge fuel that will help the world reach decarbonization as an energy source that is vastly cleaner than its hydrocarbon competitors, such as diesel and coal. When it comes to power generation, it is still able to employ much of the infrastructure used by other fossil fuels. Lately, it has assumed another role: in Europe, LNG is protecting the continent from a total blackout as Vladimir Putin is contemplating turning off the spigot, while in the United States, it is a gold mine that can potentially turn the country into a future energy superpower.
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President Joe Biden’s recent statements denouncing coal drew fire from Sen. Joe Manchin (D-W.Va.) and several western Democrats, upsetting the calculus for many elections out west. In midterms, Biden may have forgotten, all voters have a say, not just the activist base. To make things worse, Biden also “promised” to stop all oil drilling in a Q&A with a voter, which did not get enough media attention despite an available video.
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Copper is the wiring connecting the present and future. It is also the global markets’ latest runaway. The growing supply-demand gap for copper is increasing volatility in markets to the point that buyers are seeking to secure long-term deals due to increased concerns about its availability. Copper prices have surged since they hit a low point in March 2020 as COVID hit. Low copper prices (58% decline from 2010 to 2016) helped spur and sustain investments and research in renewables, but they also reduced incentives for many copper manufacturers, including Broken Hill Proprietary, Freeport-McMoran, Glencore, and Southern Copper, to increase production levels. High copper prices could constrain electrification, including for transport, and emerging technologies, such as renewables.
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The Iranian government’s violent crackdown on protests stemming from the murder of Mahsa Amini by Iran’s Morality Police is driving the West to levy further sanctions against Iran. The US Treasury Department has already placed extensive financial sanctions on the members of Iran’s Morality Police with the US State Department promising more to follow. With the protests continuing to gain steam as Iran’s oil workers simultaneously go on strike - a vital part of the Shah’s 1979 downfall - there is widespread hope that Iran’s protestors can topple the Mullahs and bring the country back into the community of nations.
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Much of China’s economic planning and domestic policy is energy focused and rests on a proven trifecta the USA would be well advised to examine and emulate where possible. First, massive investments in nuclear power, uranium refining, and modular reactors are set to make China the leading nuclear power in Asia. Second, China’s massive investment and dominance in every step of the rare earth mineral supply chain, especially coltan and lithium, is helping China monopolize the energy infrastructure of the future. Thirdly and finally, large investments in hydroelectricity (although this cannot be practically emulated in the US for lack of capacity, environmental, and permitting reasons). China’s much-publicized investment in renewables complements this trifecta but doesn’t feature centrally in any energy plans.
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Russia’s targets are not limited to nuclear. A September 12ttack on Ukraine’s second largest thermal powerplant left thousands in major metropolitan areas without power. The attack was a response to Ukrainian counteroffensives, where the Ukrainian military retook over 6,000 sq km of the Russian-occupied territory in the Balakleya, Izyum and Kupiansk regions, and seized the initiative. While this latest Russian attack was a spiteful response to battlefield reversals, the destruction of energy infrastructure has been an ever-present tactic throughout the invasion. Forcibly denying access to energy sources is not only designed to undermine Ukrainian morale and logistics, but also to threaten and undermine European unity.
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This move is not unexpected. As I wrote here, President Joe Biden’s failure in Saudi Arabia in July to secure more oil production shook Saudi Arabia’s transactional relationship (security for oil) with the USA to its foundations. Saudi Arabia began importing Russian fuel oils for domestic use to free up more crude oil for export months ago, with the Biden Administration impotent to stop it. Meanwhile, Saudi Crown Prince Mohammed bin Salman (MBS) and Russian President Vladimir Putin have enjoyed close personal relations for years. These events had already helped push oil to above $90 per barrel. However, the oil futures on October 7 remained below $90 due to recession fears.
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There can now be no negotiated reopening or resumption of deliveries even if the battlefields of Ukraine instantly fall silent. The Russians have achieved their immediate goal, with Reuters reporting “Nord Stream AG said it was impossible to estimate when the gas network system’s working capability would be restored.” This winter, Europe is doomed to face the worst energy crisis since the Arab oil embargo of 1974, or worse.
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Rising energy bills and blackouts are not just a product of the devastation caused by the recent floods. They are a consequence of Pakistan’s non-diversified energy strategy and lack of infrastructural resiliency. These floods have shattered an already broken energy system.
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For better or worse the visual perceptions of energy production drive much of its policy debates. It was as much the ugly sight of fuming coal stacks and the soot on buildings as environmental or health concerns that led to their regulation. Unfortunately, the understandable human impulse to be surrounded by beauty or to avoid ugliness is turning NIMBYs, (not in my backyard-ers) and misguided environmental activists into strange bedfellows, inadvertently acting in concert to hurt the environment and impede America’s energy transformation.
Kishida and the Liberal Democratic Party (LDP) are investing a lot of political capital and their long-term industrial policy commitment in nuclear energy.
Germany could be a European and global leader if it embraces this renaissance and overcomes its petty inter-party squabbles. Or it can just keep importing coal… and Russian gas.
Rivers are Europe’s economic and transportation backbone, and their drying will drive up energy and commodity prices.
The world’s most populous democracy is searching for ways to satiate its oil hunger, and it has decided to follow the well-worn path of engagement with the Middle East.
Russian President Vladimir Putin, Iranian president Ebrahim Raisi, and Turkish President Recep Tayyip Erdoğan met for a much-heralded meeting in Tehran on July 19th to discuss energy policy, maritime security, and Syria. Many are eager to portray the meeting as a convergence of principled anti-western leaders who will challenge the international system.
Refugees crowded into squalid camps is not a new mental image. The numbers of refugees are continuing to climb globally. This humanitarian crisis is not just a disaster on its own terms but is also an underappreciated part of our modern energy crises.
Since the historic meeting between President Franklin Delano Roosevelt and Saudi Arabia's founder King Abdulaziz aboard the USS Quincy in 1945, America’s relationship with Saudi Arabia has always been transactional: oil for security. Over the past fifteen years, ever since the election of President Barack Obama in 2008, the perceived failure of both sides to honor their terms of the bargain has produced a prisoner's dilemma of mutual distrust and uncertainty that leads each party to act selfishly and produces suboptimal choices for both. President Joe Biden's recent trip to Jeddah proved that he could not resolve this conundrum.
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