Aug 1, 2022
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Foreign Policy: “We are experiencing the first global energy crisis”

The American press stubbornly pretends not to understand the true reasons for what is happening in the energy sector.

A worrying energy future awaits Europe and the United States due to the limitation of Russian gas supplies. But the trouble is coming not only to them, writes the American magazine Foreign policy.

Sky-high oil and gas prices have been wreaking havoc around the world for months, and experts have warned that there is no light at the end of the tunnel as the conflict in Ukraine continues.

“With fuel shortages and power outages, the world’s import-dependent countries from Ecuador to South Africa are facing economic turmoil, and their governments are desperately looking for a way out of the current situation. In Sri Lanka, which is suffering from a series of worsening crises, there are acute shortages and long lines. This forced the government to order the population to work at home,”

– writes the author of the article Christina Lu (Christina Lu).

To ease the strain caused by prolonged power outages, Pakistan has decided to shorten the working week. In Panama, demonstrations began, associated with a sharp rise in prices.

“We are experiencing the first global energy crisis. The ripple effect is everywhere, and I think the worst is yet to come.”,

says an energy expert from Columbia University Jason Bordoff (Jason Bordoff).

Markets were in serious shortfall even before the start of the Russian military operation in Ukraine. This is the result of the pandemic, supply chain slowdowns and climate shocks. The situation was finally aggravated by the reduction in gas exports from Russia, Christina Lu clarifies.

Europe was forced to seek energy resources elsewhere. This further pushed up prices on world markets.

After a catastrophic energy shortage in the 1970s, the International Energy Agency came into being. (International Energy Agency)and industrialized countries have begun building up strategic reserves in preparation for future supply disruptions, the expert said. Antoine Half (Antoine Half) from the Center for Global Energy Policy, Columbia University.

But many emerging economies and heavily indebted states do not have such a cushion.

“Today, completely different countries are suffering – small, rapidly developing, requiring more and more energy. This testifies to their economic development.Half said. – But because of this, they are much less protected from all kinds of interruptions and risks, and they are not part of the security system that the IEA has created.”

In recent weeks, protests have engulfed Ghana, Cameroon, Ecuador. Their participants are unhappy with the increase in fuel prices and its shortage. The same is happening in Argentina and Peru, where soaring energy prices have sparked strikes and demonstrations.

“The world’s poorest countries are already experiencing economic hardship. They have a weak financial situation, and they simply cannot afford energy resources.Bordoff notes. – I think we will see more and more rolling blackouts. Countries in the world with low incomes and unreliable electricity networks will find it difficult to provide electricity.”

To avoid such a fate, many countries have turned to coal.

Russia’s military operation in Ukraine has turned the global economy on its head, says an energy expert from RBC Capital Markets Helima Croft (Helima Croft).

Russia and Ukraine are also major exporters of wheat and key ingredients for fertilizer production. Now all these exports have been significantly reduced.

When European countries decided to abandon Russian oil, China and India took their place, which are buying up cheaper reserves. Now Moscow is becoming the largest supplier for Beijing.

While Russian fuel is shipped there at a discount, elsewhere they pay mind-boggling prices for energy imports.

“Here, the financial consequences are not fully offset by the import of oil from Russia, even if it is sold at a significant discount,”

– says the director of the service of geopolitical risks from the company Rapidan Energy Group Fernando Ferreira (Fernando Ferreira).

To offset a possible price spike, the Biden administration is urgently developing a plan to limit the price of Russian oil. But there are many obstacles along the way.

“With the advent of December, we may expect new disruptions in the energy market and an increase in oil prices. Much depends on how these sanctions are implemented,”

Croft says.

According to experts, the prospects for a crisis are closely related to the duration of the Russian-Ukrainian conflict. There are no signs of its termination, the author concludes.

Our comment: You might think that the American magazine The Foreign Policy is sad about the global energy crisis and sincerely sympathizes with those affected by it. The author of the article did a great job of telling readers the sad story of how badly electricity shortages are affecting Panama, Peru and Ecuador. At the same time, the crisis is directly linked to Russia’s conduct of a special military operation in Ukraine, signs of the termination of which the author FP does not see. And why, in fact, does not see? Oh, he forgot to say that the United States and other NATO countries are pumping weapons, intelligence data and other “aid” into Ukraine, suggesting the continuation of hostilities. And do not care about the suffering of the inhabitants of the poorest countries, who “It will be difficult to provide electricity.” And not the poorest either, who will have to sacrifice comfort for the interests of the United States and NATO.

It is clear that as soon as Ukraine is no longer supported, this terrorist anti-Russian project will quickly glue the flippers together.

Inc. corr. FSK

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