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Energy at the heart of the geopolitical equation in the conflict between Russia and Ukraine

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If there is one element at the heart of a geopolitical chessboard, it is energy. The dispute between Russia and Ukraine is another stark example.

In a speech on Monday, February 21, Russian President Vladimir Putin He announced that the Russian forces will soon visit the regions Donetsk Based on Lugansk for the “peacekeeping mission. These two regions are inhabited by the majority of the population of Russian origin, and for many years have been the scene of frequent clashes between pro-Russian dissidents and Ukrainian government forces. Just as he did in 2015 in CrimeaIt seems clear that Vladimir Putin’s ultimate goal is to annex these two regions.

In response to the Russian president’s incursion, the German chancellor said Olaf Schulze He announced that his government would suspend efforts to obtain final approval and certification of the Russian gas pipeline Nord Stream 2. Germany will evaluate other ways to ensure an adequate supply of natural gas for its country. « The relevant departments of the Ministry of Economy will conduct a new assessment of the security of our supplies in light of the changes that have occurred in recent days, » the German chancellor said.

In the event that the situation between Russia and Ukraine continues to deteriorate, Olaf Schultz and Germany will have to identify alternative sources of energy supply, and more specifically natural gas, which is critical to the electricity grid and the country’s economy. Since last fall, the German chancellor’s government has been forced to obtain sufficient supplies of gas, because the wind industry, which the former chancellor made Angela Merkel He bet the country’s energy future, and he didn’t deliver on his promises. Many other European countries have found themselves in the same situation due to equally ill-considered energy policy decisions.

So far, the rescue of Europe in energy and natural gas has taken the form of increased imports of liquefied natural gas (LNG), most of which was supplied by the United States, and to a lesser extent by Qatar. In parallel, expanding the US’s new LNG export capacity, if it continues, could eventually provide sufficient export volumes to help Germany and other European countries be less dependent on Russian gas.

However, at the same time, members of Biden’s cabinet at the head Federal Energy Regulatory Authority (FERC), fromUS Environmental Protection Agency (Environmental Protection Agency) and Ministry of Interior Affairs Continue to multiply new measures to regulate the US oil and gas industry. One of the most notable of these regulations was the denial of licenses for pipelines to transport natural gas to markets, including LNG export facilities. Just last week, the FERC issued new policy guidance regarding permit approvals for natural gas pipelines, prompting reactions from the House of Representatives, the minority leader, Steve Scales. « For months, dozens, if not hundreds, of gas pipeline applications have fallen before the same board, contributing to record increases in energy costs for hard-working American households, » Steve Scales said in a statement.

On February 19, the Department of the Interior raged in response to an unfavorable court ruling announcing the termination of all licensing efforts for oil and gas activities on federal lands and waters, including the Gulf of Mexico. A federal judge in Louisiana has halted government efforts to increase the more than 700% in calculating the « social cost of carbon » associated with producing oil and gas, a component the Obama administration uses to block gas pipeline development on federal lands. Which the Biden government hopes to revive.

Because of these and many other actions, the US government is sailing against the tide of Europe’s growing appetite for American LNG. This means that for the remainder of Biden’s presidency, the United States may not be a reliable energy supply partner for Olaf Shultz. Qatar was able to increase its exports to Europe during the winter, but its industry also has contractual obligations with other customers that must be respected. All of this has the effect of providing the Russian president with geopolitical clout in his apparent effort to confront Ukraine once again.

The same dynamic is at work with Russian oil on a larger scale. The global oil supply and demand equation is very sensitive, even with some access to the market Ten million barrels per day from Russia. If part or all of this offer disappears due to the sanctions imposed by the United States and Europe, there will be a price $100 a barrel Soon it becomes the base price for this raw material. With the global economy already weakened and facing rising inflation, the leaders of these Western democracies know that their countries cannot afford such sanctions.

Therefore, as is often seen, energy plays a major role in geopolitics. In the current situation, it seems that Vladimir Putin is holding on to Europe and the US government. The German chancellor may have stalled progress on final approval of Nord Stream 2 for now, but given his country’s need for natural gas and the apparent lack of reliable alternatives, it will be interesting to see how many of that suspension can sustain.

Article translated from the American Forbes magazine – Author: David Blackmon

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