We have entered the age of global energy disruptions, and most likely will never really get out of it.
This is the transcript an interview given to Işın Eliçin of the independent Turkish media Medyascope.tv, an abridged version of which was published in Turkish here. Founded in 2015, Medyascope.tv is an online media platform broadcasting live interviews, discussions and commentaries through Periscope, YouTube and Facebook. It is one of the few independent journalistic voices in Turkey. You can support its work at https://www.patreon.com/medyascopetv.
Some experts warn that the world is in the early stages of a full-blown energy crisis and that the signs are already everywhere, with large-scale blackouts across China, natural gas shortages in Europe and fuel prices going up sharply across the world. This crisis, we’re being told, could slow down the fight against climate change, and some say it could also trigger the return of that dreaded 1970s economic phenomenon, stagflation. What do you think of this situation?
There are indeed signs that we might be in the early stages of a major global energy crisis, and of course this brings back memories of the 1970s. What we’re now facing, however, is not just a repeat of what happened 50 years ago, and I’m not convinced it will have the same kind of consequences and trigger a return of 1970s style stagflation. The world economy is very different today than what it was back then, the causes of the energy crisis are also different, and its consequences are likely to be different as well.
Back in the 1970s the oil shocks mostly resulted from geopolitical tensions. The geopolitics of oil were shifting at that time, as a result of the U.S. – by far the world’s main consumer then – passing its peak of domestic “conventional” oil production around 1970. Yet at global level there was no shortage of oil as there was still plenty of easily recoverable and cheap to produce oil around, in the Middle East and elsewhere. The oil price shocks occurred not because oil was lacking but because key producers decided to punish the U.S. – and the West in general – for geopolitical reasons and to leverage on this resource that they possessed and that the West needed so badly to increase their financial and geopolitical clout.
Today’s price spikes, in contrast, are not primarily driven by geopolitical tensions, even if these are always present in the energy domain. At first sight they result from a mismatch between a demand for “stuff” – and hence, for energy – that is experiencing a sharper than expected rebound from the deep slump caused by the COVID-19 pandemic, and a supply that is struggling to grow back up as quickly following the disruptions caused by the pandemic in global supply chains. Concerning energy, the prices of natural gas, coal, and oil are all spiking at the same time, all around the world, because demand is surging, and because this demand is eating into inventories despite levels of production that are not so much lower than before the pandemic yet cannot rise back as quickly as demand. Since natural gas and coal still represent the bulk of electricity generation worldwide, their price spikes and/or scarcity on global markets also lead to a rise in the price of electricity in many places.
Today’s energy crunch and price spike is thus affecting all major sources of energy, while back in the 1970s supply constraints and price shocks mostly affected just one of them. It was the dominant energy source, of course, which is why the oil shocks of that time were so consequential. Yet, in the 1970s the world could still turn to other energy sources that were less supply and/or price constrained than oil, and some uses such as electricity production or heating actually massively shifted to coal, natural gas and also nuclear in the ensuing years. Today the supply constraints and price shocks are not limited to oil but are affecting all sources of fossil energy. The supply of all of them is facing rising constraints, with shrinking spare production capacity in most cases. Hence there does not seem to be much room for shifting uses between fossil energy sources, as was still to some extent possible in the 1970s.
The sudden post-pandemic mismatch between surging demand and constrained supply, however, is probably only just the trigger of the crisis rather than its root cause. If our energy crisis just came down to that, we could hope that the disruption would be temporary and that the situation would ease and “normalize” after a period of supply/demand adjustment. But there are reasons to think that the root causes of the crisis run deeper, and therefore that it might be here to stay.
One underlying cause is a persistent lack of investment in energy exploration and production in recent years. Investments in new oil developments dropped after the price of oil collapsed in 2014, and never really recovered – on the contrary they dropped again in 2020 due to the pandemic. A lot of those investments were simply insufficiently profitable given the level of oil prices the growing uncertainty concerning future demand. Investments in natural gas were also affected because the oil and gas industries are closely intertwined and because natural gas prices themselves have been low for over a decade, especially in the U.S. following the “shale revolution”. Investments in coal have also been decreasing, even if mostly because of rising environmental concerns as well as related mounting regulatory and social pressure. The result is that, as the 2021 “World Energy Outlook” published in October by the International Energy Agency (IEA) made clear, the world is not investing enough to meet its energy needs, let alone its future needs. No wonder then that when the global economy picks up as sharply as in recent months Asia is struggling to get as much coal as it needs, Europe as much natural gas as it needs, and the whole world as much oil as it needs.
Is this situation going to persist? Well, it may ease to some extent in the coming months, and there are signs that it might already be easing a bit. Yet there is also something probably more fundamental that’s happening in the background. Just like all non-renewable natural resources, fossil fuels are stock-based, exhaustible and subject to depletion. As their use increases their reserves get depleted, which tends to impose rising constraints on the quantities and costs of the resources that can be obtained, but also to degrade their quality. In fact, depletion means that over time it gets inevitably more and more difficult, costly, resource-intensive and polluting to get fossil fuels out of the ground, and that the energetic quality and productivity of what is extracted tends to go down, resulting in a decreasing capacity to provide net energy to society and to power useful and productive work.
Fossil fuel depletion is, fundamentally, what constitutes the background to our energy crisis and the reason why it is probably here to stay. Depletion, as it advances, inevitably degrades over time the return on investment of new energy exploration and production, and hence progressively depresses investment. Depletion, and not just the effect of climate policy or price variations, is fundamentally the reason why investment in fossil fuels is trending down and will continue to do so in the future.
What does this all mean for the fight against climate change and the energy transition? Is the gathering energy crisis going to trigger an acceleration of the transition away from fossil fuels – or on the contrary hamper it? Only time will tell, of course, yet there are signs that the crisis may slow down the pace of deployment of “modern” renewables (solar and wind) rather than accelerate it. In fact, the rising price of fossil energy is now triggering a spike of the production costs of both solar cells and wind turbines, which is putting numerous deployment projects at risk. Fossil fuels are indeed used extensively along the whole value chains of solar and wind, both directly and indirectly, and so far there is absolutely zero empirical evidence that modern solar panels and wind turbines could be produced and deployed without these fossil fuel underpinnings and inputs. This means, of course, that when fossil energy becomes scarcer and more expensive then renewable energy becomes more expensive as well – which is exactly what seems to be happening now as the production cost of solar panels and wind turbines is going up.
In fact, modern renewables are unlikely to become ever cheaper, as so many keep claiming, and even if they do that would still be insufficient for the world to turn its back on fossil fuels. Not just because fossil fuels underpin the production of solar panels and wind turbines, but also because fossil-fuelled power generation still retains a significant cost advantage over renewables when taking a full system view, meaning for delivering a same end product, i.e. not just some electricity, but electricity that is available 24/7, without interruption or variability, 365 days a year – which is what end-users demand and what fossil fuels can provide. Furthermore, in a market-driven economy investment is not driven by relative costs but by relative profitability. Typical investments in oil and gas projects continue to earn returns that remain significantly higher than those of renewable projects, due to the fact that barriers to entry are much higher for fossil fuels, but most fundamentally to the fact that the energetic quality and productivity of renewables is inherently “inferior” to fossil energy.
On all the aspects that determine or influence energetic quality and productivity (energy density, power density, fungibility, storability, transportability, ready availability, convenience and versatility of use, convertibility, etc.), solar and wind energy are in fact “inferior” to fossil fuels. Biophysical examination as well as empirical evidence so far shows that the capture of diffuse and intermittent energy flows and their conversion to electricity through man-made devices is, inherently, an imperfect substitute for the extraction and burning of concentrated energy locked up in coal, oil and gas, and hence that it might not be able to provide the same services and value to society or not on the same scale. Unfortunately, no amount of “innovation” seems to be likely to fundamentally change that.
This “inferiority” is fundamentally the reason why investment in renewables remains very far from what would be needed to have a chance of reaching the world’s claimed ambitions to reach “net zero” emissions of greenhouse gases by mid-century, and of a really transitioning away from fossil energy. Fossil fuels still represent about 80% of the world’s final energy consumption, a share that has barely changed in the last decades despite the growth of solar and wind. So far there is not yet any transition away from fossil fuels and into renewables underway, and modern renewables only exist as an extension of – or an add-on to – fossil-fuelled industrial and technological civilization.
Our energy future, as a consequence, is unlikely to be one of superabundance of dirt-cheap clean energy, as we often hear. Rather, it’s likely to be one of increasing scarcity and rising costs. Increasing scarcity and rising costs of fossil energy – as a result of the relentless, inescapable and mounting impacts of depletion and of its consequences. Increasing scarcity and rising costs of energy in general, as alternatives to fossil fuels themselves get more expensive and increase the overall cost and complexity of our energy systems.
Energy being used for doing and producing everything, these rising costs will likely ripple through the economy and feed inflationary pressures in years to come. However, a return of 1970s style “stagflation” seems rather unlikely at this stage. First because the bargaining power of labor has since then been crushed in industrialised countries, and even if staff shortages are fuelling wage rises in some sectors at the moment this is unlikely to result in a sustained wage-price inflationary spiral as occurred back in the 1970s. Second because inflationary pressures, if they were to rise further and persist for a prolonged period of time, would probably not just lead to economic stagnation but to outright recession. The substitution of the oil-fuelled expansion of the post-WWII period by a debt-based growth model, which was only starting in the 1970s, has now largely run its course and cannot keep the global economy going for much longer. After five decades of relentless credit expansion the whole global debt-based financial edifice is only really holding because the world’s largest central banks have been engaged for years in an exercise in perpetual bankruptcy concealment. If inflation was to rise further and prove persistent, these central banks would probably have to raise interest rates to try to tame it, which in a world overloaded with debt would inevitably risk triggering a mechanism of debt deflation that would quickly send the economy into recession and stop the inflationary spiral in its tracks or even reverse it.
Hence, if the overall trend of energy prices is most probably up in the coming years, the rise is unlikely to be continuous and uninterrupted. Rather, periods of rapid price increase could be followed by sudden crashes, meaning that what is likely to dominate is price volatility rather than sustained inflation, and economic instability rather than stagnation. We have entered the age of global energy disruptions, and most likely will never really get out of it.
In a 4-part 2018 essay analyzing the state of the global economy, you wrote that ours”is a world that has now left itself just a few decades to stop using the energy sources that underpin its modern economy and even modern civilization – or that risks seeing this modern economy crashing down and modern civilization burn itself to the ground.” Three years later, how much the outlook has changed and how far are we from the crash of modern civilization?
Well, concerning the first part of your question, nothing has fundamentally changed in the outlook, because such outlook is long-term in essence and doesn’t change in a matter of years. If anything, the situation is even more concerning today as three years have passed and we haven’t really made any significant progress towards stopping our use of those energy sources that underpin the modern economy and even modern civilization, i.e. fossil fuels. On the contrary, we’re still very much trapped in our Faustian bargain with fossil energy.
The recently held COP26 was of course an occasion for all countries to “pledge” increased efforts to reduce their carbon emissions and hence their use of fossil fuels, yet despite the advances made we seem to be stuck at the stage where we announce ambitious and then even more ambitious pledges, yet remain incapable to start making good on them. Renewable energy is growing fast, but global energy demand keeps growing faster. From 2009 to 2019, only one quarter of the growth of the world’s total final energy demand was covered by renewable energy, meaning that whatever progress we’re making so far at cleaning up our act is being dwarfed by the irrepressible hunger of what American systems thinker Nate Hagens calls the mindless, energy dissipating “Superorganism” into which global human society has metabolically morphed.
2020 aside, we keep burning more and more fossil fuels and emitting more and more greenhouse gases, year after year. In 2021 our use of fossil fuels sharply rebounded, and resulting emissions are expected to be just marginally below their pre-pandemic high of 2019. Every year that passes and emissions don’t go down, the downward slope of the emissions drop required to achieve our climate targets keeps getting steeper and steeper. According to some estimates, global emissions have to be cut by 7.6% every year for the next decade to meet 1.5°C Paris target – in other words, an equivalent level to the drop caused in 2020 by the COVID-19 pandemic, year after year, for a decade and more.
This means that, in essence, we’re left with a choice between either crashing down the modern economy – which is what a 7.6% yearly drop of emissions over a decade and more would inevitably mean, regardless of how much we invest in wind and solar – or letting modern civilization burn itself to the ground – which would be the result of failing to slash emissions that sharply and quickly, as climate change would then inevitably risk crossing dangerous thresholds and profoundly destabilizing the world. We could also have a mix of both an economic meltdown and a failure to contain global warming, which sounds of course like the worst-case scenario, yet is somehow looking more and more plausible. It’s actually the essence of Faustian bargains to bring you to a stage where you have no good options anymore. A stage where you’re pretty much damned if you do and damned if you don’t. The fact that we are not, or not yet, fully recognizing our addiction to fossil energy as a Faustian bargain does not change much to the fact that we have painted ourselves into a very, very tight corner.
This doesn’t mean, by the way, that we shouldn’t do whatever we possibly can to choose the least bad options, as the differences between those and the worst ones could still be quite dramatic in terms of impacts and consequences – for the biosphere and for the human species. But it’s probably easier to do so once we have understood that the best we can hope for is damage control rather than a bigger, better, brighter tomorrow.
Concerning the second part of your question, about how far we now are from the crash of modern industrial civilization, I cannot answer this and, frankly, nobody can. What I can say with some confidence is that we are closer to it than we were three years ago, and probably further away from it than we will be three years from now… If this answer doesn’t sound satisfactory, and probably isn’t, it is because this “crash” or rather “collapse” that we’re talking about is a process, rather than an event or a moment. A process that is complex and involves a series of twists and turns filled with sometimes ambiguous and counterintuitive signals. How this process will unfold in the future is still very much uncertain and a matter of speculation. It could be in a dramatic and rapid way with the world going over a sort of “Seneca cliff”, to use a term coined by Italian physicist Ugo Bardi, or rather in a long, slow, and bumpy “catabolic” way as predicted by American author John Michael Greer. The only thing that seems clear at this stage is that the process has been triggered, is underway, and is poised to significantly accelerate in the next decade. So far it rather looks like a “stairstep” process of crisis, partial recovery, and renewed crisis, yet it is not impossible that the accumulation of stressors will at some point project us into a very steep and brutal downward “Seneca” slope.
In the U.S. the Republicans are blaming the Biden administration and its climate agenda for the fuel price spike, labelling it “Biden’s Energy Crisis”. Are they rightly doing so? Can the consequences of this crisis increase the chances of Trump’s comeback?
The Republicans are in the opposition, and since the debate is now so irrevocably polarized and militant in the U.S. they of course blame the Biden administration for anything and everything.
To some extent the fuel price spike in the U.S. and the rise of heating costs for American families can in fact be related to the energy policies of the Democrats, i.e. halting new oil and gas leasing on federal land, shutting down pipelines, investing more in solar and wind, etc. All things that according to the Republicans amount to waging “war” on domestic energy production – domestic fossil energy production, that is. As I explained earlier, both a lack of investments in fossil fuels and the complexification of energy systems through the addition of supposedly cheaper alternatives are likely to lead – are already leading, actually – to increasing scarcity and rising costs of energy in general.
However, the causes of the fuel price spike in the U.S. and elsewhere run much deeper than whatever the Biden Administration may have done since last January. And if there is a war being waged against domestic fossil fuel production it is clearly not very successful so far. U.S. coal production is up significantly this year, natural gas production is back up near pre-pandemic highs, and shale oil production is bouncing back sharply as well. Production from the Permian Basin, the largest U.S. oil field and the primary driver of U.S. output, could even surpass its pre-pandemic record in a matter of weeks.
Therefore, even if it may seem quite paradoxical to see the U.S. president ask OPEC and Russia to increase oil production rather than try to first boost domestic investment and output, it simply shows that the U.S. cannot ramp up production quickly and high enough to satisfy the insatiable demand of the American consumer. Demand for motor gasoline in the U.S. has returned to pre-pandemic levels since the summer, and its rise exceeds the capacity of domestic supply to ramp up as quickly. Despite all the talk in recent years of “energy independence” or even “energy dominance”, the U.S. never really stopped depending on energy imports and never really became the swing oil producer that it pretended to be.
Overall, the U.S. case is of course a good illustration of industrial civilization’s energy dilemma. America remains the world’s worst “fossil fuel junkie”, by far, and even as it tries to increase the doses of its detox “replacement medications” (i.e. renewables), it can’t help going after its fossil energy fix, day after day.
Is the rise of gas prices at the pump likely to increase the chances of a Trump comeback? Well, it’s too early to make predictions about what could happen in 2024 – in our increasingly volatile environment 2024 is a world away… If high prices persist into 2022 they are of course likely to feed popular discontent across the U.S., especially in the “flyover states” where median incomes are lower and car dependency is higher. However, these states already tend to vote for the Republicans rather than the Democrats anyway, and the Republicans already had a good chance of winning the 2022 midterms before the energy crisis struck.
In a global context, do you expect this energy crisis to play into the hands of populist and/or autocrat leaders?
I expect it to play into the hands of countries that export fossil energy on a wide scale, and more precisely of net exporting countries as they are the ones that can really leverage on their exports to increase their power and influence over others. Most of these net exporting countries have authoritarian or autocratic political regimes, which benefit from rising prices and in some cases have a capacity to amplify the spikes by manipulating their supplies or at least limiting their growth. That can only be a relatively short-term strategy, though. First because these suppliers need solvent clients and have no interest in squeezing them or starving them too much. Second because most of these net exporting countries are also affected by depletion and are likely to see their export capacity erode in the not-too distant future. Russia’s oil reserves, for instance, are becoming increasingly hard to recover, and will get even more so in the next decade. A number of the giant oil fields in the Middle East are also thought to be close to their production peaks and are likely to go into decline in the next decade. Oil and gas exporting countries therefore have a shortening window of opportunity to cash in on their exports and use their oil money in a wise way – i.e. in a way that doesn’t ruin their clients or antagonize them too much.
Concerning populist politicians in Western democracies, they could of course benefit from popular discontent if energy prices remain high or keep rising for a long period of time. The “yellow vests” movement in France was sparked by a rise of fuel prices, and similar protest movements could appear this winter in Europe, where energy poverty is already high and reaching the middle classes in many places. Rising gas, electricity or fuel prices could stir anger and trigger protests across the continent, which could in some cases coalesce with other protest movements already mounting, such as those against COVID restrictions. Such protest movements, if the were to rise, would likely benefit populist politicians, or at least populist politicians would certainly try to use them to their advantage.
How might the energy crisis affect the U.S./China rivalry? As both countries are engaged in the so-called “energy transition” in their own ways, is there also a race underfoot to achieve “green supremacy”, as some say?
Well, energy is the foundation of geopolitical power, and energy crises tend to affect the balance of geopolitical power. China’s explicit objective is to displace the U.S. as the dominant global geopolitical power in the near future, and energy is central to the success of this endeavour. Yet when it comes to the U.S./China rivalry this specific energy crisis is so far mostly exposing China’s dependence on energy imports.
If you look at how the energy crisis has been impacting both countries in recent months the difference is striking. In the U.S. the main concern is about gas prices at the pump, but in China it’s rather about securing enough coal supplies to power the country’s factories. China primarily still needs energy to produce stuff that it can export, while America needs energy to move people and stuff – mostly imported stuff – around. The two countries have in fact developed very different relationships to energy and energy metabolisms. China never had access to an abundance of domestic energy resources on the same scale as the U.S., and hence never could afford to develop the same kind of energy exuberant culture. Which is why its energy use per capita remains far lower than America’s, even if in absolute numbers it has long overtaken the U.S. as the world’s biggest energy consumer.
China’s rise as “the world’s factory” could be fuelled by domestic coal, but its coal production peaked shortly after 2010, and hence it has for many years undertaken to diversify its energy mix. This mix remains largely dominated by coal, but its use of oil and natural gas are growing fast. China is now the world’s top importer of coal, oil and natural gas, and its march to global dominance requires securing massive and ever-rising supplies of energy coming from elsewhere. Securing fossil energy supply can be considered China’s foremost strategic and geopolitical priority and a key focus of its foreign and trade policies, including in particular its “Belt and Road Initiative” (BRI). China, in fact, has become “a voracious, and increasingly hungry, energy hog”, as the New York Times recently put it, and there is nothing more important to its leaders than making sure that the hog is well fed, whatever the cost.
In recent years China has actually increased its imports of fossil fuels – oil, coal and liquefied natural gas – from the U.S., as a result of a Trump era deal to buy more American energy products in exchange for continued access to the U.S. as an export market for its manufacturing. Yet the centerpiece of its energy security strategy is certainly not about importing more from its geopolitical rival. It’s rather about its energy cooperation with Russia, which holds the sixth largest oil reserves in the world, the second largest coal reserves, and by far the largest natural gas reserves, and which has considerable export capacity since its own economy is only 1/8th the size of that of China – and even less if you don’t count the energy sector itself. China has a policy to transition more and more of its electricity production from coal to gas in the future, and is in the process of building the infrastructure needed to import massive amounts of gas from Russia. The current energy crisis is unlikely to delay these efforts, on the contrary, it’s likely to accelerate them. Overall, Chinese imports of fossil fuels from Russia have grown fast in recent years, and are poised to grow even faster in the next decade.
Besides consuming and importing more and more fossil fuels, China has also of course aggressively developed nuclear and renewables. It has the third biggest number of nuclear reactors in activity and the biggest number of reactors under construction, and it has doubled its nuclear power generation capacity in just four years, from 2016 to 2020. It has also become the world’s largest market for modern renewables, by far, and now represents about half the world’s cumulative installed capacity as well as half of global yearly additions for both solar and wind power. However, nuclear, wind and solar combined still represent less than 10% of its primary energy mix, and the recent energy crunch showed that renewables are still a long way from being able to power China’s manufacturing and exporting machine.
The Chinese leaders have announced bold plans for further investments in solar and wind, and hence the share of renewables in the country’s energy mix should keep going up in the coming years. Yet in their minds investments in “clean” technologies are first and foremost aimed at boosting domestic energy supply and capturing market share in key fast-growing global supply chains, rather than at reducing carbon emissions. Not only does China largely lead the world in terms of renewables installed capacity and yearly increases, but it also and more fundamentally outrageously dominates the manufacturing side of the solar and wind industries. It already produces most of the world’s solar cells and panels, and captures a rapidly growing share of the wind supply chain. It also now dominates global battery supply chains and therefore is capturing a very large and rising share of the various value chains that together underpin the energy transition.
Does it mean that China is on its way to “Green Supremacy”, which I guess means dominating a world where “green” energy and technologies are taking over? Well, if the term actually meant anything China would certainly be much better placed than anyone else to achieve it. It is the world’s largest producer and exporter of solar panels, wind turbines, new generation batteries and electric vehicles, it holds a near monopoly over the processing of most rare earth elements and critical minerals underpinning these value chains, and it is also becoming a leading player in renewable investment abroad. The U.S., by contrast, is largely dependent on imports from China for the solar panels and wind turbines it installs, as well as for rare earth elements and critical minerals. Its imports of lithium-ion batteries, especially from China, are also surging in synch with its rising appetite for electric vehicles. The Biden administration has plans to repatriate manufacturing and production of “green” technologies to the U.S., yet at this stage America is largely outdistanced in all of those technologies.
Russia, which provides Europe with about 35 percent of all of its gas, making it the biggest supplier, remains the only provider that could potentially influence the situation on the market, and Europe doesn’t seem to have many alternative options for increasing its gas supplies in the near future. Is it is normal that Moscow seeks leverage for economic and political gains? How is this unequal relationship affecting the European political landscape, and also the EU’s relationship with Biden’s U.S.?
Well, it’s “normal” for Moscow, of course. Leveraging on its natural resources for economic and political gains is what Russia does, has been doing for a long time and will keep doing in the future. Russia has never really entered in the modern game of supposedly win-win international cooperation, and its vision of international relations remains largely based on power relations and struggles. In this vision, Russia can only really gain if and when others loose. This is not at all surprising in fact, since this is typically the vision that dominates in countries whose economies are built around the extraction and export of natural resources. Russia is fundamentally a petro-state that does not really produce anything that the world wants to get other than its oil and gas – the only exceptions being of course its vodka, its weaponry and its dirty money.
Over the last three decades the EU has made itself increasingly dependent on Russian gas, as a result of its enlargement to the East but also and more importantly of its short-sighted bet on gas as a “bridge fuel” to a cleaner energy system, and of the depletion of its own reserves and of those of some of its other external suppliers. This has given Russia increasing leverage over the EU, to the point that even a small manipulation of its supplies may in some circumstances have dramatic consequences for the continent.
This unequal relationship is of course affecting the European political landscape, mostly by dividing European countries depending on how much they depend on Russian gas. Dividing Europe is actually a key strategic aim of Russia’s foreign policy, and energy exports are a tool in the service of that aim. At the same time, Russia remains of course fully dependent on oil and gas revenues and perfectly knows that it cannot risk antagonizing its main clients by going too far in manipulating or “weaponizing” oil and gas deliveries for political aims. As long as its exports are not massively re-routed towards China, which could take several more years, it will still need to sell its oil and gas to the Europeans. The EU-Russia gas trade is in fact a case of mutual dependence.
This mutual dependence with Russia is affecting the EU’s relationship with the Biden administration, in the sense that European countries do not necessarily have similar interests as the U.S. when it comes to dealing with Russia. The Biden administration failed to prevent the completion of the Nord Stream 2 pipeline, which could still enter into operation in the coming months and make the EU even more dependent on Russian gas imports than it already is. The U.S. has also largely failed to become a credible alternative supplier of gas to Europe. Even if its exports of LNG have been growing in recent years, they remain limited compared to the sheer size of Russian supplies, and American LNG transported overseas remains also significantly more expensive than Russian gas delivered through pipelines.
The fact that the U.S. and Europe have different and somewhat diverging interests when it comes to Russia could have important consequences in case the conflict in Ukraine would turn into full-out war. The EU will probably try to do “whatever it takes” to avoid such outcome, as the last thing it wants is to have to impose and enforce sanctions on Russia that could jeopardize the delivery of natural gas to European citizens and businesses. Russia also has no interest in getting to that point, actually, yet it probably sees as being in its interest to maintain a veiled threat of military action in Ukraine, as this threat itself is probably sufficient to divide the Europeans, as well as to divide Europe and America.