By Helen Gloege ’23
Staff Writer
On Feb. 24, 2022, “Russian President Vladimir Putin launched a full-scale invasion of Ukraine,” according to Al Jazeera. In response to the declaration of war and military actions, Russia has faced “severe punitive sanctions, including asset freezes and export bans,” the source further reported.
Amid the discussion of sanctions has been talk of decreasing reliance on Russian oil and gas exports. Currently, gas “from Russia [accounts] for about 40 percent of the EU’s natural gas imports,” according to the BBC. Additionally, out of the nearly five million barrels of crude oil exported by Russia everyday, over half are sent to Europe. To try and decrease reliance on Russian nonrenewable energy, the U.S. has issued a ban on Russian oil. In addition, the U.K. is attempting to phase out the use of Russian oil by the end of 2022. Further, the European Union “has proposed a plan to make Europe independent from Russian fossil fuels before 2030,” according to the BBC.
Experts like Putin’s former chief economic adviser have said that “a ‘real embargo’ on Russian energy by Western countries could stop war in Ukraine,” according to the BBC.
“A billion [euros] is what we pay Putin every day for the energy he supplies us,” diplomat Josep Borrell said to the BBC, indicating that if Europe were to pull its investments in Russian oil and gas, it would have a large economic impact.
Oil and gas companies have also been pulling their money from Russia. These companies include oil and gas giants ExxonMobil, Shell and BP, according to The New Republic. These movements are significant, as BP “would lose about one-third of its reported oil and gas production,” if they pulled out of Russia, according to The New York Times.
Many oil and gas companies moved to Russia about 30 years ago, as the country holds “24 percent of the world’s total natural gas reserves,” The Conversation reported. Russia also has a network of pipelines that can easily move oil into the European Union.
In response to the invasion of Ukraine, the American Petroleum Institute, a trade organization for the oil and gas industry, posted a thread on Twitter listing ways to “ensure energy security at home and abroad.” The Twitter thread had recommendations from the API that included a call for the government to “release permits for energy development on federal lands” and to “issue U.S. offshore leasing plan for next five years.”
The cost of oil and gas is based on the relationship between supply and demand, according to The New Yorker. When a country decides to not purchase oil or gas from Russia, there is less oil and gas available to them.
The current issues of supply and demand are not just because of the Russia-Ukraine conflict but “because demand during the pandemic has bounced back faster than supply,” Vox reported. The increase in demand and decrease in supply caused by the pandemic is magnified when the source of oil and gas from Russia is taken away.
This response of increasing oil and gas production in the U.S. has been controversial as it continues reliance on fossil fuels. According to Vox, in calls with shareholders, oil companies expressed that they aren’t planning on investing in new oil drilling projects. Currently, increased oil prices allow the companies to make significant levels of profit.
Vox argues there isn’t much that can be done immediately to fix the U.S.’s current reliance on Russian oil as it involves “a lot of infrastructures, which [are] impossible to scale up in enough time to make an impact on current prices.”
In their reporting, Vox spoke to an energy analyst with the Institute for Energy Economics and Financial Analysis, Clark Williams-Derry, who said, “By locking yourself into a gas-powered future, you’re locking in higher costs for the long haul.” Thus, in the end, increasing oil and gas companies’ permits or access won’t help current gas prices and will likely keep the prices up.
The other alternative for continuing reliance on Russian oil and gas is to move toward clean energy, according to the Los Angeles Times. The Los Angeles Times quoted the director of the Center for Climate and Security, Erin Sikorsky, who said, “The more that countries can wean themselves off oil and gas and move toward renewables, the more independence they have.” The alternative — relying on other fossil fuel projects or building new infrastructure for oil and gas — “would lock in dependence on fossil fuels that humanity can’t afford” if it is going to meet climate goals and prevent rising temperatures, according to the Los Angeles Times. The dependence on oil and gas will also continue to contribute to national security concerns, as seen through this conflict and through the increasing effects of climate change. Should Europe choose to invest in the clean energy industry and fully make good on its commitments to cut down on fossil consumption en masse, global markets stand to benefit, according to the Los Angeles Times. European investment in clean energy, the Los Angeles Times continued, could lead to increased development of foundational technologies necessary for the large-scale consumption of clean energy resources. This potential European investment would connect to current global energy technology infrastructures, as many of these clean energy technologies are developed and produced outside of Europe, as stated by David Victor, an international relations professor at the University of California San Diego, in an interview with the Los Angeles Times. Due to the principle of economies of scale, or the phenomenon when the cost per unit, like solar panels, will decrease due to the increased scale of output, as defined by Oxford Languages, increased production or investment in the production of clean energy technologies will cause the prices of these items to go down. Thus, potentially making them more available to countries with fewer economic resources to start their investments in clean energy resources.