Do you think that the energy crisis in Europe and Asia is not linked to oil and OPEC? Think about
At an energy forum in India on Wednesday, Saudi Energy Minister Prince Abdulaziz bin Salman said he saw no role for Saudi Arabia or OPEC in mitigating crises current energies facing Europe and Asia.
He claimed it was because “the issue is not the availability of.”
It is true that the current energy crisis facing Europe and Asia has been precipitated by supply cuts at a time when demand was increasing. Saudi Arabia does not export natural gas and OPEC does not deal with natural gas. Although many of the members of these organizations produce and export natural gas, OPEC and OPEC + policies are only designed to have an impact on oil production and exports.
On the other hand, the European and Asian energy crisis is not just a natural gas crisis. Electricity prices in European and Asian countries are on the rise. The fear is that these countries will not be able to supply enough electricity to their populations to keep the lights on. There are further concerns about whether the cost of energy will become too high for individuals to pay their heating bills this winter. Oil therefore plays a role in these crises.
Graphic: Courtesy of Ellen R. Wald
According to the International Energy Agency (IEA), the European Union, China, India and Japan all produce more electricity (electricity) from oil than natural gas. They are also importers of oil and natural gas. So even though the crisis started with fears of a shortage of natural gas, oil is vital.
Oil may be even more needed if there is not enough natural gas this winter (and in the years to come), as renewables are not (yet) available or sufficiently reliable. Compared to expensive energy sources like nuclear, petroleum is relatively easy to supply and generate electricity. If natural gas is not available, oil will likely replace it. (We see this in the United States during brief cold spells every year).
Even though Saudi Arabia and OPEC + cannot have a direct impact on natural gas prices, more oil from Saudi Arabia and OPEC + could make a difference in electricity prices. , especially in European and Asian countries that burn oil for electricity. However, comments from the Saudi Minister of Energy indicate that despite (more recently) calls from India and Japan for OPEC to increase oil production to ease high prices, OPEC + remains committed to its current production plans.
Of course, Prince Abdulaziz has shown that he likes to “surprise” the market with a unilateral change in Saudi production. Yet in the absence of this, it seems OPEC + is standing firm.