In the oil crisis of the 1970s, the price of oil quadrupled in the three months following the embargo. At the time, the United States believed that a lost market share would hurt the producing nations financially. Instead, these producers offset this loss of market share at much higher prices. Consumers in the United States, however, have been hit hard by fuel shortages and emergency energy-saving measures as the country’s oil consumption has risen steadily for decades thanks to cheap oil in the Middle East. Interestingly, although the embargo did not apply to Europe, the continent was hit even harder by the way prices rose after the Arab producers moved. Fuel distribution was introduced and national speed limits were introduced to save fuel. The latest move on speed limits may sound familiar to those who follow the International Energy Agency’s recommendations: it is one of the ten steps the ILO has made necessary to reduce the EU’s dependence on Russian minerals. fuel. The fact that the current shortage includes all fossil fuels and not just oil is one of the reasons this crisis could be worse than it was in the 1970s, according to Yergin, who commented in an interview. on Bloomberg this week. “I think this is potentially worse,” he told Bloomberg. “It includes oil, gas and coal, and it includes two countries that happen to be nuclear superpowers.” Leaving aside the understandable concern that the last part of the statement would trigger anyone in Europe or North America, the former is indicative. Europe’s dependent on Russia for almost half of its coal and gas imports and about a quarter of its crude oil imports. And the EU has just decided to ban imports of Russian coal in a bid to hurt the Russian economy as punishment for Russia’s actions in Ukraine. Here is what happened after the announcement of the ban, which has not yet been approved, by the way. Indonesia increased its own coal prices by 42%, Australian miners said they had limited capacity to replace Russian coal, and Asian coal prices rose amid reports that European buyers were chasing replacement coal. What happens to coal is more or less what happens to oil and gas. As Yergin noted in an interview with Bloomberg, the global gas market is already quite tight and there is no ready-made replacement for Russian gas if it stops flowing. This is despite efforts by US LNG producers to boost exports. Another energy expert, David Blackmon, went one step further this week on the Energy Transition podcast, saying the United States did not have the physical means to deliver on Biden’s EU pledge of an additional $ 15 billion. cubic meters of gas in the form of LNG. Blackmon noted the time needed to boost gas production and expand liquefaction capacity, as well as the limited fleet of LNG tankers and existing LNG export commitments to other buyers. In this environment of limited supply and demand for fossil fuels, which seems to be significantly exceeding this supply, things are already critical without an oil or gas embargo, something a senior EU official said could become “necessary” at some point. The cost of living is rising across the continent and governments are struggling to curb it. If the EU follows the embargo, the results could be catastrophic, as almost every analyst has been warning for weeks. By Irina Slav for Oilprice.com More top readings from Oilprice.com:
