High prices and winter shortages are delaying the arrival of the post-fossil world


The question “Do you think the winter is going to be cold?” Has a double-edged meaning this year. Whether the temperature is above or below zero, it seems increasingly likely that our ability to keep our homes and workplaces warm will be more limited. The thermostat setting may not be sufficient. There could be real fuel shortages, as well as high prices.

We speak of “probable” rather than “certainly”. But with the price of crude oil ending Tuesday at a higher price than it has been since November 2014 – just under $ 80 a barrel – everyone is on edge.

We are watching closely what the Saudis and the Russians are doing. Together, they lead OPEC +, the cartel bringing together the former OPEC and the large non-OPEC producers. Their economic motivation is simple but has an inner tension. The Saudis want higher prices to balance their budgets, which is not in line with their ambitions for economic transformation. The Russians also want high prices for oil, but in a dilemma we can savor, they don’t want to impact their dominance of the natural gas market. This gas, for which there are real shortages, can often be replaced by oil.

“Yes” is the answer to those who should be wondering if we are putting our faith in the president. Vladimir PoutineVladimir Vladimirovich Putin’s director of the NSA expects to face ransomware attacks “every day” in five years Fiona Hill says Trump was obsessed with Putin, not Russia. in Moscow and Crown Prince Mohammed bin Salman in Riyadh. An unpleasant thought for many of us, but a reason we may be praying that despite dire predictions, things don’t turn out the way we fear. As one writer noted in the Heard on the Street column of the Wall Street Journal on Tuesday: “… [T]he industrialized world does not need to panic.

For White House Biden, this is a potential crisis that they could do without. Already criticized in recent weeks for publicly calling on OPEC to increase production, a gesture at odds with what is deemed fair for anyone who remembers the 1973 oil price hikes and queues at pompously, it would only worsen the sense of political chaos of the Withdrawal from Afghanistan, congressional obstructionism and lower opinion polls.

What happened to shale oil, shale gas and America’s energy self-sufficiency? Ah, so yesterday. And such a misunderstood concept. The status of the United States as a net exporter did not equate to energy independence, and the chandelier was taken out of shale oil and gas because so many efforts resulted in losses that investors want to recoup instead. than to let grow. And, despite possible shortages of natural gas at home this winter, tankers filled with U.S. liquefied natural gas (LNG) will steam across the ocean to fulfill supply contracts for customers in Europe and beyond.

It might be a little premature to start playing the blame game, but the parameters would likely be: The transition to a post-fossil world comes with its own challenges, and new fuels are always more dreams than realities. . The very fact that oil and gas, let alone coal, have gone out of fashion has reduced investment in these areas even though we still need them. Simply put, why invest money in a project that takes 20 years to pay off when the need for fuel can be drastically reduced in 10 or 12 years? And, will the efforts to turn hydrogen into a usable (and green) fuel materialize in 15 or 20 years – or maybe never?

In the short term, of course, we are constantly being taken on the wrong foot by COVID-19. Have we, the industrialized world, accepted? Is the economy about to pick up or not? The implications for energy demand are potentially significant, both upward and downward.

In the meantime, whatever happens, we fall back on this often controversial word: the “market”. It will deliver goods and services where the demand is, at a price. Whether people like this price is another question. Hopefully, personally, a mild winter (although ski resorts may not agree).

Simon Henderson is Baker Fellow and Director of the Bernstein Program on Gulf and Energy Policy at the Washington Institute for Near East Policy. Follow him on twitter @shendersongulf.

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