Analysis by Energy Workforce President Tim Tarpley
This week, President Biden travelled to Kyiv to reiterate U.S. support for Ukraine as it continues to fend off a Russian offensive in a continued effort by the Russian army to annex Ukraine. President Putin spoke to his country Tuesday morning in a sometimes rambling, vaguely coherent message where he made it clear that as far as he was concerned, Russia would continue its invasion for as long as he remained President. Any hopes of a negotiated settlement in short order appear non-existent as long as President Putin remains in power.
President Putin continued his bizarre claims that the West was responsible for the war and claimed that the ultimate goal of support for Ukraine was to destroy Russia. To wrap up his address, President Putin announced that Russia intends to withdraw from the New START nuclear treaty, which Russia had already been violating of for a number of years.
What does this all mean for energy policy? In short, it means that things will not be returning to pre-Ukraine invasion “normal” anytime soon. Some analysts had hoped that this would be a short conflict and that a “near normal” could be reached within a few years. Clearly, this will not be the case — the world appears locked into this new posture for the near term. The West appears solidly behind continued military support for Ukraine, as well as for continued, and in fact increased, sanctions against Russia. New rounds of sanctions from both the EU and U.S. are expected in the coming months.
We can also expect European thirst for U.S. LNG to continue for quite some time. Even if the war did come to some sort of stalemate or conclusion, given the extremely low point of relations between Russia and the West, a resumption of European reliance on Russian gas for their energy needs appears very unlikely. On top of these deteriorating relations, the bombing of the Nord Stream pipeline makes any resumption of Russian energy deliveries many years off, if ever.
Another curveball that is worth watching for our sector is the apparent consideration by China to begin to supply lethal weapons to Russia in hopes of helping them to avoid defeat in the conflict. The United States has publicly warned China of serious repercussions for taking this action and it remains to be seen if China will heed these warnings. China, like Russia, has become increasingly defiant of Western influence in recent years and with President Xi’s consolidation of power, it is very possible he chooses to support Russia. Should China take this action, we can expect increasingly deteriorating relations between China and the West and even new rounds of sanctions and tariffs on Chinese goods. American companies will likely face additional pressures to move supply chains outside of China. This could further disrupt supply chains and potentially increase inflationary pressures within the United States.
IEA Releases Methane Report Calling for More Emissions Reductions
The International Energy Agency released a report this week calling for more spending from the worldwide energy industry to curb methane emissions. The report estimated that a $3 billion dollar investment by the global energy industry could result in as much as a 75% reduction in methane emissions. The report finds that for oil and gas, the majority of those savings could come from new technologies to detect, find and repair leaks.
For more information on these issues, contact [email protected].
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
