The Energy “Window” for the West Is Closing

NEW – July 3, 2022

What is the current energy crisis? If to look at the current energy balance meter, it turns out that the top four countries that consume energy from the beginning of 2022 take more than half of the total volume, with China accounting for 25%, the United States – 15.2%, India – 6.37%, and Russia – about 5.5%. And the next six (Japan, Brazil, Canada, Germany, South Korea and France) – another 14.2%, that is, the top ten accounts for about two-thirds of the world’s energy consumption. The remaining 185 states together are satisfied with only one-third of the energy consumed.

It is also worth noting that more than half of the world’s energy consumption is covered by gas and coal (27.11% and 26.8%, respectively), another 23% – by oil, and 4.5% – by nuclear power. All “green”, renewable energy sources (RES) currently account for less than 19%. This is almost twice as much as in 2011, when the share of renewable energy sources was 9.1%. The main growth was due to the development of wind and solar energy. But firstly, this was done through special subsidies, secondly, with current technologies, the potential for such growth is almost exhausted, and thirdly, there has been no qualitative change in the energy balance over the past decade. Only the share of oil decreased significantly, from 33% to 23%, while the share of coal decreased slightly, from 30.3% to 26.8%. Nuclear power plants remained approximately at the same level – 4.5% instead of 4.9%, but the share of gas increased – from 23.7% to 27.11%.

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It may seem strange, but the production of primary energy is not more uniform than its consumption. Of the 14 billion tons of conventional fuel (TCF) produced in 2020, 68.4% came from the top ten producing countries: China, the United States, Russia, Saudi Arabia, India, Canada, Australia, Indonesia, Iran and Brazil. At the same time, the top four provided about half (6.94 billion TCF) of the world’s energy.

From the top 10 consumer countries, only Russia, the United States, and Canada have a positive energy balance. The rest have to import a significant part of the energy they need in one form or another. For China, this part in 2020 was 632 million TCF, for Japan – 336 million TCF, for India – 318 million TCF, for South Korea – 216 million TCF and for Germany – 179 million TCF. Russia is the world’s largest net exporter of energy resources – in the equivalent of 671 million TCF. The next is Saudi Arabia, 390 million TCF. In general, the market of exporting countries (sellers) of energy resources is more dispersed than the market of importing countries (buyers).

Consequently, the ability to comprehensively (by military, financial and other means) control global energy supplies is a necessary condition for global leadership for any subject of international politics. And this function, since the creation of the “petrodollar” and the subordination of other fiat currencies of the collective West to it, that is, for almost half a century, which was the prerogative of the United States, has now been critically lost by them. This is because of the fact that their leadership and their power can be said to have been abused. As a result, the United States has gone from being a “global leader” to a “global parasite”, having already lost real economic and, by now, real military and technological superiority by 2008. It is no longer possible to compensate for these losses by further strengthening the financial and informational terror.

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A manifestation of this was the explosive rise in the price of energy carriers in the second half of 2021, which seems to be mandatory in the framework of the prevailing economic theory of increasing their physical production and supply… did not follow. The problem here was not the OPEC+ cartel agreement on oil (oil just did not rise too much in price compared to coal and gas), or the depletion of physical reserves of raw materials, but the fact that even these increased prices did not compensate for the total costs of producers due to the multiple increase in the money supply of the dollar and other fiat currencies in the period 2008-2021. The financial system has become like a compass needle, under which an ever-growing emission “magnet” is placed – it no longer shows the desired direction “to the north”.

The freezing and possible confiscation of Russia’s gold and foreign exchange reserves, the attempt to impose “marginal prices” for the purchase of Russian oil, the Biden administration’s policy that led to a collapse in American energy companies ‘shares in June this year, Russia’s transition to trading its gas for rubles, and the “fresh” nationalisation of the Sakhalin 2 project are the most obvious examples of how that the current global energy crisis is a derivative of the crisis of the global financial system, the crisis of the “dollar empire”.

Therefore, without a “re-accounting of assets” in the new system of financial coordinates, this crisis will not stop, but will only grow. And judging by the recent summits of the EU, G7 and NATO, the United States, along with its allies, is still fiercely resisting such a transformation — apparently hoping to impose its will on the rest of the world at all costs. Will the alliance of democracies have the strength and resources to achieve this result before the “window of opportunity” closes for them — including at the hands of Russia?

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Oleg Shchukin

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