Winners and losers of the fossil fuel war

The weight of Russia

And Moscow has stated that it will receive payment in rubles for its oil and gas exports to Europe, a region 40% dependent on Russian gas and 27% on its oil, with which it has not been able to completely do without after six weeks of war.

The late US politician John McCain (1936-2018) said in 2014 that Russia “is a gas station masquerading as a country” to underline the nation’s heavyweight status in the field of fossil fuel energy.

Of the 1.7 trillion barrels of crude oil reserves on the planet, Russia has 107 billion, surpassed only by Venezuela, Saudi Arabia, Canada, Iran and Iraq. The Eurasian country produces 10.8 million b/d (more than 10 percent of the world total), behind only the United States and almost as much as Saudi Arabia.

In gas its weight is even greater, since it has 20% of the world’s reserves (38 of 188 trillion cubic meters), making it the leader by far, and with its annual production of 638 billion cubic meters it covers more than 18% of global demand.

The richest will earn more

Among the winners, oil companies will earn the most, and this year the 25 largest could make profits between $100 and 120 billion higher than in 2021, when, according to the US organisation Accountable.US, they made record profits of $237 billion.

Consumers, meanwhile, will pay the price. In almost all of Latin America a liter of gasoline costs well over a dollar ($1.75 in Uruguay, $1.40 in Chile, and $1.32 Guatemala, for example) and even in up-and-coming Guyana – which has crude oil but no refinery, Graham pointed out – it sells for almost $1.10.

In the United States, where one out of every five barrels of oil the world produces is consumed, a liter cost 75 cents a year ago and this April averaged $1.10, with higher prices on the Pacific coast.

“In Europe, the majority are now betting on a pragmatic and possibilist vision, which continues to focus on renewable energies and energy efficiency, but a debate is opening up about the use of nuclear energy and even coal, which would make a better balance between energy security and climate change,” said Ramírez.

Graham believes that “the present crisis underscores the geopolitical risks of dependence on foreign oil and gas and the importance of reducing it for security reasons, which can be an accelerating factor for the transition to renewable technologies and green hydrogen (obtained from clean energy sources).”

“But on the other hand, some may interpret the present crisis as a reason to increase domestic and regional hydrocarbon production in the short term, which may extend dependence on fossil fuels, while companies recover the costs of new investments,” he said.

In addition, there is pressure on governments to provide fuel subsidies to lessen the impact of the crisis on consumers, which may be politically difficult to reverse and might thus generate the opposite effect to what is needed to drive the energy transition, Graham said.

The International Energy Agency (IEA), made up of major industrialized consumers, recognized at its Mar. 24 meeting held to assess measures to address the crisis “the importance to energy security and clean energy transitions of ensuring clean, affordable, reliable, resilient, and secure energy infrastructure.”

Energy security and the transition to clean energies are “inextricably linked” in the view of the IEA, and its executive director, Fatih Birol, stated that “the response to this energy crisis will be an acceleration of the transition to clean energy,” not necessarily for climate reasons, but for energy security.

(By arrangement with Inter Press Service)

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