The world is not just seeing high oil prices, it is at the start of a full-fledged energy crisis, says Helen Thompson, professor of political economy at the University of Cambridge.
Thompson’s Last Book Trouble: hard times in the 21st century, explains the superimposition of geopolitical, economic and political shocks in recent years, showing how much trouble stems from the problems generated by fossil fuels, and the major role played by banks and debt.
Putin sees gas as ‘a geopolitical weapon’
Thompson – whose previous books include Oil and the Western Economic Crisis (2017) and China and the American Mortgage (2010) – stated that Ukraine’s status as an energy transit state has contributed to its current position.
She said that from 1991, at the beginning of Ukraine’s existence as an independent state, there was a set of divisive issues between Russia and Ukraine.
“Energy was at the forefront and that was because the pipelines the Soviet Union had used to sell gas and oil to Western Europe during the Cold War years now passed through Ukraine.
“The Ukrainians and the Russians had to make deals about paying for this oil and gas and maintaining these pipelines and they caused a lot of tension.”
Thompson said Russian President Vladimir Putin believed Western European countries would be very limited in how they could react to Russia’s actions in Ukraine, due to their dependence on Russian oil and gas.
Russia is set to cut off gas supplies to Finland on the grounds that it is seeking to join NATO and Thompson said this is further evidence that Putin sees gas in particular as “a geopolitical weapon “.
“He sees it as the most important instrument of power, in a way, that Russia has.”
The issues surrounding the energy situation today date back to the oil crisis of the 1970s and more recently to 2005, Thompson said.
The Orange Revolution happened in Ukraine in 2005 when a president was elected who wanted to steer the country away from Russia and become a member of the European Union and NATO, although that didn’t happen, a she declared.
“I think we can see a serious deterioration in relations between Russia and Ukraine as a result.”
Thompson said it was also in 2005 that the German and Russian governments agreed to build the Nord Stream gas pipeline under the Baltic Sea, “the first of these that bypasses the transit of gas from Ukraine.”
Global oil production also stagnated in 2005, she said.
“It’s also true that I think in 2005 you can see Russia and China getting closer and that was the year in Europe when the French and the Dutch both rejected the Constitutional Treaty of the ‘European Union.”
In 2014, the European Union worked with the then Ukrainian government to provide it with EU associate member status, but Russia “was deeply unhappy with the prospect”.
Thompson said it was naive to believe that Ukraine could be brought closer to the EU without having a security guarantee from NATO.
“Trying to bring Ukraine closer to the European Union without security guarantees seemed likely to me to produce the kind of Russian response we saw annexing Crimea that year.”
Mr Thompson said that although the French and German governments are prepared to work towards Ukraine’s EU membership, they have both vetoed Ukraine’s membership of the EU. NATO.
“Turkey is essential”
Turkish President Recep Tayyip Erdogan this week reaffirmed his opposition to Finland and Sweden joining NATO.
Turkey occupies a crucial position within NATO due to its position on the southern Black Sea coast and it provides a geographical link between Europe and the Middle East, Thompson said.
But she said Turkey has repeatedly been denied EU membership.
The French, and President Emmanuel Macron in particular, have been uncomfortable with the idea of Turkey being a member of NATO, she said.
“But if you look at a map and you look at where Turkey is and what NATO needs to do in terms of defending states against Russia, including supplying arms to Ukraine, that- ci not being a member of NATO but receiving a lot of support from NATO at the moment, then Turkey is indispensable.”
However, Turkey has a set of grievances, she said, not least about the Kurds and the support that some European governments, including Finland and Sweden, give to Kurdish positions.
“He would like NATO’s orientation to be more compatible with Turkish geopolitical goals, especially with regard perhaps to the eastern Mediterranean.”
Thompson said Turkey is in a position where it can ask for some of its grievances to be addressed in exchange for acquiescence.
She said it shows how difficult it is for NATO to stay united on big issues for any length of time.
Geopolitical rifts around energy will continue
An increase in renewables has led to an overall increase in energy use, rather than replacing fossil fuels, Thompson said.
She said there are a number of countries where the proportion of renewable energy in their electricity mix is significantly higher than it was a few decades ago.
“But on the other hand, if you look at something like transportation, we’re pretty much where we were in terms of using oil.”
Thompson said some countries like China and India have embarked on increasing oil and gas consumption as their economies grow.
But she said China has considerable advantages in terms of green energy.
China is in a strong position in terms of electric vehicles, it dominates metal mining, it is responsible for a greater proportion of solar panel manufacturing, she said.
She said energy has always been and will continue to be geopolitical.
“I think it’s quite likely that ultimately the geopolitical competition around metals extraction will be somewhat different from the geopolitical competition around oil and gas, in part because metals don’t are not distributed as arbitrarily around the world as oil and gas have been.”
According to Thompson, since we will be living on multiple sources of energy – both green and fossil fuels – for some time to come, the old geopolitical fault lines around energy will remain, but there will also be new fault lines. geopolitical rift around green energy.