Energy

In the wake of Russia’s attack on Ukraine, gasoline and energy prices soared in the United States. While they’ve come down a bit since, it’s worth examining why war in Eastern Europe caused a spike in prices thousands of miles away — and whether a common proposal in response would have made a difference. Over the last decade, Republicans and Democrats have made “energy independence” a major policy priority. The goal in a nutshell is to produce the energy we need at home, so that the United States is more insulated economically from international disputes abroad. On this goal, advocates have made progress — in fact, the United States is already energy independent by some measures.

When sanctions were imposed on Russia there was a big exception: Europe was still buying and paying for oil – leading to a bizarre situation. The West was doing everything it could to help Ukraine while still sending Putin hundreds of millions of dollars a day. But how much was that revenue worth to the Kremlin? As sanctions began to hit Russia, the price of Brent crude (the oil benchmark) soared to $130 a barrel, the highest since the 2008 financial crisis: an increase of over 90 per cent. It’s fallen since then but today it's still sitting between $107 and $115 dollars a barrel – well above where it had been weeks ago. But are these price rises making money for the Kremlin?

Is Saudi Arabia shunning Washington? Mohammed bin Salman has reportedly been refusing to phone Joe Biden, who wants the kingdom to turn on its oil taps as the West desperately seeks alternatives to the Russian energy market.  Riyadh – the world’s largest oil exporter – has so far failed to accommodate Washington’s pleas. Ahead of the Russian invasion in mid-February, the US asked the Opec+ cartel – of which Saudi Arabia is the most important member – to produce more oil to slow the already rising prices. Opec+ stood firm, and said they would increase production by 400,000 barrels a day in April, a rise agreed before the threat of a Russian invasion of Ukraine.

Between 1980 and 2005, the UK produced more energy than it needed. Today, we import more than a third of our energy and over half of our natural gas. Households are facing an increase in their annual tax bills from £1,500 to an eye-watering £3,000. While the Business Secretary may have tweeted this week that the current situation is a matter of high prices rather than security of supply, families already struggling to heat their homes are unlikely to tell the difference as they decide whether to heat their homes or pay for food. This was never a foregone conclusion. A decade ago, the US shale gas revolution was well underway, with fracking creating hundreds of thousands of jobs and driving down gas prices.