The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, a turn for the worse in relations between China and Australia that led Beijing to stop importing coal from Down Under, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines.
“It radiates from one energy market to another,” said Daniel Yergin, author of “The New Map: Energy, Climate, and the Clash of Nations.”
“Governments are scrambling to get subsidies in place to avoid a tremendous political backlash,” Yergin said. “There’s a pervasive anxiety about what may or may not happen this winter because of something we have no control over, which is the weather.”
As global leaders prepare to gather in Glasgow, Scotland, at the end of the month for a climate conference, advocates for renewable energy say the crisis shows the need to move further away from coal, gas and oil as prices for those commodities spike. Their critics contend just the opposite — that wind and solar have been tested and came up lacking. Analysts also worry that the shortages and high prices worldwide will severely crimp the economic recovery.
In the United States, which as an energy producer has been spared the worst consequences of the crisis even as gasoline prices have hit their highest mark since 2014, Energy Secretary Jennifer Granholm suggested Wednesday that the Biden administration might sell off part of the country’s Strategic Oil Reserve or ban exports of crude oil.
Energy analysts warned that such moves could be self-defeating, and on Thursday the department backpedaled.
“DOE continues to monitor global energy market supply and will work with our agency partners to determine if and when actions are needed,” a department statement said. “All tools in the Tool Box are always under consideration to protect the American people. Consistent with what the secretary said, there is no immediate plan to take those actions at this time.”
One leader who appears to see an opportunity in the crisis is Russian President Vladimir Putin, whose vast energy reserves the country often taps as leverage during times of energy stress. On Wednesday, Putin suggested that Russia’s European customers could solve their problem if they imported more Russian gas.
Analysts doubt it would make much of a difference right away, because at the moment Russia does not have a great deal to spare, but Deputy Prime Minister Alexander Novak said that even a small additional amount of exported gas could dampen what Moscow characterizes as a speculative frenzy in Europe.
Tension in Europe
This seemingly minor nudge comes against the background of sharp disagreements within the European Union over a response to the crisis. Leaders are looking to the E.U. as either scapegoat or savior, with some premiers asking the bloc for a standardized solution to the crisis and others blaming the price hikes on its sweeping policies to combat climate change and reduce emissions.
Hungarian Prime Minister Viktor Orban, who has friendly relations with Putin, said Wednesday that the E.U. was partly to fault for the increases and that the bloc “must change its policy.” That same day, E.U. climate chief Frans Timmermans said those who blame the bloc’s Green Deal are doing so for “ideological reasons” and that the transition away from fossil fuels will help end price crises, not exacerbate them.
“The wrong response to this would be to slow down the transition to renewable energy,” Timmermans said at a meeting of environmental ministers. “The right response is to keep the momentum and perhaps even look for ways to increase the momentum.”
Energy analysts argue that Europe moved too quickly away from fossil-fueled power, before ensuring that sufficient renewable sources could take up the slack in an emergency. Caught halfway in a transition that should take decades, they say, Europe is now scrambling to find coal and gas to burn in its remaining traditional plants.