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Will the Russian Invasion Accelerate Peak Oil?

Will the Russian Invasion Accelerate Peak Oil? thumbnail

It was 1973 when a war between Israel and a coalition of Arab states led Saudi Arabia and other oil producers to impose an embargo on crude shipments to the United States.

Oil prices soared, and the way the world consumed energy changed. France built a fleet of nuclear power plants. Japan did, too; it also started to import liquefied natural gas. In the United States, oil use for electricity generation plummeted and was replaced by coal and nuclear power.

A half-century later, another conflict is roiling global energy markets. The question now is how Russia’s invasion of Ukraine will change the world’s energy system.

The conflict is unfolding against sweeping changes in the energy sector. A growing number of countries and companies are pledging to phase out fossil fuels and adopt cleaner alternatives as they combat climate change, even as global fossil fuel use continues to climb.

Those competing trends make it difficult to predict the future of the world’s energy systems. Russia’s attack on Ukraine further complicates the forecast.

Some analysts say the attack on Ukraine could speed the world’s transition away from fossil fuels, especially in Europe. Others say the war could reveal just how dependent people are on fossil fuels.

But few question whether the conflict will change how the world consumes energy.

“Shocks change the energy mixes of countries,” said Nikos Tsafos, who tracks energy and geopolitics at the Center for Strategic & International Studies.

Europe was already considering a fundamental shift in the continent’s energy system before the invasion was ordered by Russian President Vladimir Putin. The attack will likely hasten that transition, given Europe’s reliance on Russian gas, Tsafos said.

German Chancellor Olaf Scholz announced this week that the country will accelerate by 15 years its timeline to generate almost all its power from renewables by 2035.

“The stuff coming out of the mouths of European leaders has never come out of their leaders’ mouths before,” Tsafos said. “There is a different strategic resolve coming out of Europe, and if you’re not factoring that into your model, I think you’re missing something.”

The impact could be felt globally as clean energy supply chains serving Europe scale up to benefit other parts of the world.

“Whatever you thought hydrocarbon demand was last week, it’s less now,” he said.

Yet others said there is little evidence to support the idea that the world will use the crisis to accelerate away from fossil fuels. The proliferation of climate pledges in recent years has come against the backdrop of soaring fossil fuel consumption. The International Energy Agency estimates oil demand will surpass pre-pandemic levels this year.

Western sanctions and the withdrawal of oil companies from Russia will likely dampen oil industry growth under Putin, said Robert McNally, president of the Rapidan Energy Group and a former economic adviser in the George W. Bush administration.

If global oil demand continues to climb in the future, that could leave the world scrambling to find additional barrels if Russia’s oil industry is diminished by the global response to its invasion, McNally said.

“I really do think where you stand on Russia depends on where you sit with regard to peak oil demand,” said McNally, who believes demand will grow. “I think we are a year or two away from looking out the window and saying, ‘Oh, my God, we’re not decarbonizing as fast as we need.’ If I’m right about the inability of Russia to grow, it is going to be a really big problem.”

There are important differences between the current crisis and 1973. For one, the Organization of the Petroleum Exporting Countries will likely try to stave off large-scale supply disruptions — the exact opposite of the embargo that OPEC implemented in 1973. Saudi Arabia already has plans to increase production by 1 million barrels a day by 2027.

“Saudi Arabia and UAE are going to be watching carefully to see if there is going to be any disruption to oil flows,” said Jim Krane, who studies oil markets at Rice University’s Baker Institute for Public Policy.

While both countries are keen to avoid angering Russia after years of working together in OPEC+, “their first allegiance will be to keep oil markets well supplied and replacing any shortage from Russia,” Krane said.

Russia produces 11 million barrels of oil a day, making it the world’s third-largest producer behind the United States and Saudi Arabia. The country exports between 5 million and 6 million barrels per day of crude, with about half of that destined for Europe. Another 1.6 million barrels is shipped to China, according to a recent analysis by Amy Myers Jaffe, managing director of the Climate Policy Lab at Tufts University.

Past experiences of Venezuela and Iran offer some insight into how the crippling sanctions levied on Russia might affect the country’s oil industry. Those countries were able to find buyers for their crude, but were forced to sell it at a discount.

While Western sanctions have thus far avoided Russia’s energy sector, some of its crudes are trading at steep discounts.

Jaffe said in an interview that she expects the crisis will prompt European countries to overhaul their energy mix. But that shift will take time, she said.

“In the short term, it’s hard. There is only so much flexibility to move away from the path dependency of our existing infrastructure,” Jaffe said.

Thane Gustafson, a professor at Georgetown University who studies Russia and has written about its oil and gas sector, echoed that assessment.

When the Soviet Union fell, Western oil companies flooded into Russia. The country’s oil companies are now proficient at fracking and horizontal drilling after years of working with companies like Halliburton and Schulmberger. That reduces the impact of departures like BP PLC, Exxon Mobil Corp. and Shell PLC, both of which announced this week that they would exit operations in Russia.

Most forecasts, meanwhile, show oil demand continuing to rise this decade.

“The implication is Russia will continue its hydrocarbon model for another decade,” Gustafson said.

The picture grows more challenging for Russia in the 2030s as decarbonization trends stand to take hold and demand for oil begins to plateau and decline. The higher cost of producing a barrel of oil in Russia could leave the country on the outside of a shrinking global oil market, he said.

The question for the world is whether the conflict in Ukraine slows the broader energy transition.

“There’s such inertia in the energy structure. The energy transition is bound to be slow, even though there are unexpected surprises such as incredible decline in the cost of renewables or the tremendous increase in worldwide sales of EVs,” Gustafson said. “The energy transition requires a tremendous amount of investment and government commitment. It doesn’t just happen. It requires a more or less functioning global economy.”


17 Comments on "Will the Russian Invasion Accelerate Peak Oil?"

  1. Baby Peanut on Thu, 10th Mar 2022 11:24 am 

    UPI WORLD NEWS MARCH 10, 2022 / 9:18 AM
    Chernobyl nuclear plant still without power as crews wait for halt in Russian shelling
    By Clyde Hughes

    March 10 (UPI) — Utility officials in Ukraine said Thursday that they can get workers to repair a damaged power line that’s cut off electricity to the Chernobyl Nuclear Power Station, and heightened fears of a radiation leak, if Russian forces allow it to happen.

    Heavy Russian shelling damaged the high-voltage power line to the plant on Wednesday, and crews have not yet been able to repair it due to sustained Russian assaults in the area.

    “We are ready to immediately repair the lines and restore power to Chernobyl nuclear power plant, which has been without electricity for more than a day. Just stop the shelling and let our teams do their job.”

    Ukrenergo said the plant is presently running on emergency diesel generators, but the fuel is limited. Chernobyl’s cooling, ventilation and fire-extinguishing systems — all vital in the running of the nuclear power plant safely — are powered by the damaged line.

  2. Theedrich on Thu, 10th Mar 2022 2:02 pm 

    The U.S. could not care less about Chernobyl. The only thing Washington wants is to destroy Russia and subjugate it to its own bloodsuckers.  In the view of the bribe-ocrats, America is doing the will of Yahwéh and his Chosenite vicars and the sainted zillionaires of the world.  Chernobyl is useful only as a propaganda device, along with refugee women and children, bleeding freedom fighters and such, their plights described by breathless talking heads and even accompanied by sappy background music where possible.

    There is no mention whatsoever of bipartisan Wasington’s drive to conquer the entire globe and remake it in its own corrupt image.  As G.W. Bush famously said when he was starting his Levantine multi-wars two decades ago, “We’re trying to change the world!”  No mention of the U.S.-ignited “color revolutions,” the beggaring of Russia after 1990, of the recent CIA-NGO subversion of Georgia culminating in an anti-Russian war, etc., etc.

    The inherent aimlessness (“democracy”) of the American populace as a whole makes it easy to seduce it with quasi-religious jibberish.  Other factors, such as the worldwide propaganda supremacy of American news organizations, the fact of the U.S. dollar as a (nearly) global “reserve currency,” and a military implanted in over 100 countries, not to mention massive bribery of the leadership of countless nations which thereby become our “friends,” give the U.S. massive imperial clout.  Such tiny hiccups as, say, radiation spewing out of Chernobyl can be easily blamed on the Kremlin, with the Ukrainians portrayed as innocent bystanders.

    But all of America’s power is ultimately based on physical resources under its control, especially petroleum and natural gas.  This is slowly becoming more and more difficult and expensive to get, due to diminishing returns explained thoroughly elsewhere by many experts.  Hence the panicky drive to seize total world control before the fossil-fuel age closes down and America joins the dinosaurs as a footnote in history.  The erratic movements of stock markets, popular derangement due to narcotics, the failure of law enforcement due to politics, the religious fervor about “green energy,” and millennialist expectations of perpetual-motion machines making infinite growth possible — all of these things and more forebode societal collapse, to which the Masters of the Universe are blind.

    But as with Chernobyl, they are also blind to the fact that physics rules our existence.

  3. Duncan Idaho on Thu, 10th Mar 2022 2:44 pm 

    World Peak Oil was in Nov of 2018.
    We are not even close to that now.

    “American democracy can’t afford another generation of adults who don’t know how to talk and listen and think.”
    (over half the US population over 16 reads at less than a 6th grade level.
    Functionally illiterate)

    That is so obvious it should not be controversial, but it is.

  4. IAmFinallyFree on Thu, 10th Mar 2022 2:50 pm 

    Finally, I have waited for this moment for so long. The time of chaos, rape, torture, death of other and my own death.

    Now with the high price of gasoline and dieswel, police will stop running and choase can finally take hold for ever.

    Waited for this moment where I can do what I want without having to face the fake justice of the controllers of earth: police, courts system, prison system.

    I am finally free.

  5. Hello on Thu, 10th Mar 2022 2:51 pm 

    >>> over half the US population over 16 reads at less than a 6th grade level

    How many negros and other sludge in the US now? Half?

  6. WeAreBackToTheLawOfNature on Thu, 10th Mar 2022 3:33 pm 

    Each time you watch a animal documentary they are talking about the law of nature. They are so proud to repeat that to us over and over.

    The law of nature is the stronger, most intelligent live and survive and other die.

    The law of nature, the controllers of the earth talk so much about it, is now back and it applied to whole living realm. Any forms of live, humans, aliens, animals is now subject to the law of nature, not the fake laws of the controllers of earth. Finally man like me can breath easily, now that the law of nature has been restored into the humans kingdom.

    The fake laws created by the controllers of the earth; family court, divorce course, justice course, laws of all kinds: criminals, family and others are now invalid because of high gasoline and diesel price. Police force are now ineffective because they don’t have the gasoline to run their cars.

    We are back to the law of nature that you love so much. Good news because I was fed up with fake justice from the controllers of the earth, now we are back to the law of nature.
    We are back to the law of nature that you love so much. Good news because I was fed up with fake justice from the controllers of the earth, now we are back to the law of nature.

  7. TooMuchEnergeticParasitesOnEarth on Thu, 10th Mar 2022 4:43 pm 

    There is a fucking parasite that is trying to steal my energy using sex. I can feel it attached itself to the tips of my penis. I feel some kind of ticking on the tip of my penis when the parasite try to suck energy out of me.

    I will fight you with meditation if I have too. This earth is full of energetic parasite. This energetic realm called earth must be completed destroyed. If you destroy earth you kill all the energetic parasite living in it.

  8. ANAL CAPTURE SHOCK elite darkie supertard Sohrab Lutchmedial aka streetshitter MUZZ-19 ATTN elite whitey (((supertard))) DREDD Y elite whitey (((supertard))) Theedrich on Thu, 10th Mar 2022 6:01 pm 

    ANAL CAPTURE SHOCK elite darkie supertard Sohrab Lutchmedial aka streetshitter MUZZ-19

    ANAL CAPTURE SHOCK elite darkie supertard Sohrab Lutchmedial pushed daisies

    SHOCK streetshitter hated elite whitey supertards

    please be ease we love muz

  9. Biden’s hairplug on Thu, 10th Mar 2022 6:07 pm 

    The usual suspects of Suckerbook will allow for calls for violence against Russians or Putin:

    I hereby call for violence against Zuckerberg as a measure of selfdefense. And Zelensky. When the Russians play siocer with the head of this chap, you know for a fact that the neonazi uprising Euro-Maidan has been reversed.

    The International Jews against the rest of the world:

    Wanted, dead or alive.

  10. Biden’s hairplug on Fri, 11th Mar 2022 2:02 am 

    The large Russian column is on the move, probably to complete encirclement of Kiev. Next close off electricity, heat, fuel, food and wait for white flag:

    “New satellite images from Ukraine show parts of Russia’s 40-mile long convoy outside Kyiv have now ‘repositioned’ in nearby forests“

    Beginning of the end of the Zelensky regime.

  11. Biden’s hairplug on Fri, 11th Mar 2022 2:31 am 

    Liz Truss trashed:

    Women in politics, seldom a good idea.
    Fair weather department of the human race.
    With the world now descending into WW3, their role will gradually be phased out.

    Women in politics, just another stupid western idea.

  12. Biden’s hairplug on Fri, 11th Mar 2022 2:47 am 

    North-Korea working on a new intercontinental ballistic missile:

    Range: 13,000 km

    North-Korea and its nukes will play a major role in eliminating the US from Asia and Pacific.

  13. FamousDrScanlon on Fri, 11th Mar 2022 7:46 pm 

    clog, it’s pretty funny watching the different monkey troops continue to have an open cheque policy for better human killing & maiming machines.

    They’re in a rush to kill each other before the consequences of Overshoot do.

    Kim says – “I must kill Round eye before drought do”

    R&D for blood-N-guts.

    Who will be the last tards standing?

    Millions suffering in deadly pollution ‘sacrifice zones’, warns UN expert

    Businesses blamed for rise of toxic hotspots hitting poor communities hardest

    “There are sacrifice zones all over the world, in every region: in the north, in the south, in the east, in the west, in rich countries, in poor countries,”

    Boyd, the special rapporteur on human rights and the environment, cited physical health issues, including cancer, heart disease, respiratory illness, strokes and reproductive health problems, as well as “incredible mental health problems associated with living in these places because people feel exploited, they feel stigmatised”.
    Hazy early morning view of Canary Wharf in London
    Exposure to air pollution may increase risk of Covid death, major study says
    Read more

    All of this infringed their human rights, Boyd said. “Their rights to life, their rights to health, and … their right to a clean, healthy and sustainable environment. You cannot reconcile that fundamental right to a healthy environment with these absolutely horrific environmental conditions.”

    There’s nowhere for the cancer chimps to hide their toxic waste anymore.

    Shit where you eat & eat where you shit…and the humans ain’t finished consuming & shitting yet.

    Some more climate jacked floods spreading more toxic shit far & wide

    Australia coal export terminal declares force majeure on flood

    Australia’s Port Kembla Coal Terminal declared a force majeure after destructive floods disrupted loading, curbing supply to a global market already grappling with a shortage of cargoes.

    The export terminal, located 72 km south of Sydney, ceased operations Tuesday after excessive rainfall caused significant slumping along the stockyard, according to a document seen by Bloomberg.
    Sign Up for the Energy Digest

    The force majeure sent to customers is still in effect, according to people with knowledge of the matter. Officials at the terminal didn’t immediately respond for comment.

    The disruptions will further tighten the global coal market as importers scramble to replace shipments from Russia after its invasion of Ukraine. Asia’s benchmark Newcastle coal price surged to a record this week on increased demand from Japan to Europe.

  14. Biden’s hairplug on Sat, 12th Mar 2022 1:15 am 

    Dutch government blocks Ukraine accession to EU:

    “Netherlands’ tight fist now chokes Ukraine’s EU bid“

    Exactly right!

    Hopefully the war ends soon and we slowly can begin mending relations, to start with supply lines. And everybody quietly accepts that Ukraine and Belarus is Russia’s front yard. And that the EU uses the occasion to strengthen its military… so it can be used some day in North-America, when China and Europe are competing over spheres of influence there, after CW2.

  15. Biden’s hairplug on Sat, 12th Mar 2022 1:27 am 

    What are the Europeans and especially the French up to?

    “What the hell does Emmanuel Macron think he’s playing at with Vladimir Putin?“

    “EU leaders fail to set a date to end energy dependence on Russia“

    Very good, no date at all. But we do need to set a date on phasing out Beavis Biden and Kamela Butthead.

  16. Biden's hairplug on Sat, 12th Mar 2022 5:13 am 

    This just in from Jesusville:

    “Bennett advises Zelensky to surrender to Russia, Zelensky refuses”

    Bennett has point. It doesn’t make sense to let your already very shabby country become destroyed if you know you are going to lose anyway. Better to mimic the Taliban and opt for partisan warfare, if you have to. There will be no help from NATO. There is nothing wrong with Finlandization. Finland the original is doing great.

  17. Biden's hairplug on Sat, 12th Mar 2022 5:54 am 

    Some brains left in Britain:

    “Lib Dems set out roadmap for rejoining EU single market and want to ‘end petty Brexit squabbles’”

    Brexit is irreversible, the EU will make sure of that, but rejoining the Common Market is a good idea, although unrealistic for at least a decade, if not a generation. The LibDems are setting themselves up as the only unequivocal pro-Europe party, and as such can expect to set themselves on an electoral growth path.

    I hope they succeed eventually, so we in Europe do not have to worry about a UK concentrating on destroying the EU from the outside, rather than the inside.

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