Western energy security is imploding and prices will stay high
Tom KirkmanIndependent Project Manager
Witnessing the energy security implosion in the U.S. and other Western countries is both disheartening and expensive.
Expect Western energy prices to stay higher for far longer, as a direct result of idiotic and destructive government finagling and heavy-handed mandates.
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“Oil prices are soaring, and, as always, we read in many articles that OPEC and Russia are to blame.
However, if OPEC and its allies were almighty and the drivers of oil prices, why have Brent and West Texas Intermediate (WTI) crude plummeted in 2022?
OPEC only reacts to demand, but it is not a price-setter. It is a price-taker.
… We cannot blame OPEC when prices rise and ignore them when prices fall.
The biggest challenge for the oil market in developed economies in the next five years is self-inflicted.
Governments and financial institutions all over the world declared war on investment in fossil fuels under the misguided view that supply and prices would not be affected.
According to JP Morgan, there is a chronic underinvestment in the oil and gas complex that exceeds $600 billion per year.
… The energy transition cannot happen through ideological imposition.
It requires technology and competition.
Destroying the incentives to invest in oil and gas and imposing an ideological, not industrial, view of energy has made developed economies more dependent on fossil fuels.
… Developed economies have destroyed all incentives to invest in diversification and security of supply of oil and gas driven by an ideological view of the world without having a feasible, abundant, and flexible alternative.
Thus, when the United States administration imposes more restrictions on oil and gas investment and the European Union decides to reduce nuclear capacity and ban the development of domestic resources, all they have done is make their economies more dependent on foreign suppliers.
Western governments now demand that OPEC produce more while, at the same time, saying that their nations will not use fossil fuels in ten years.
This is the imaginary deal that we, in the West, offer to oil and gas producing nations:
“Dear oil and gas producers, you have to produce as much as we demand and sell it cheap, investing billions of dollars in development, but we will not use your product in ten years”.
I imagine there is no rush to sign such a deal.
… This may be yet another energy crisis created by political design.
Unfortunately, instead of learning and changing, many developed nations’ policymakers will prefer to impose restrictions on consumers.
Ultimately, the incorrect planning of this energy transition is not a question of energy sovereignty or climate change, but a way to control citizens.
●●●》That is why many governments prefer to see soaring energy prices, because that will allow them to impose restrictions on consumers.”