Russia’s invasion of Ukraine, and the West’s response, are ushering the world into a new energy, economic, and political era. In broad outline, this new era will have less-globally-integrated energy markets, and less-secure supplies of fossil fuels. Since energy is the irreducible basis of all economic activity, this translates to a precarious global economy and a likely reordering of national alliances. We are, in short, living through a moment that may be as politically and economically transformative as the World Wars of the 20th century, though with little likelihood of an outcome anywhere near as desirable as the boom decades of the 1920s or 1950s.
Energy
We begin with energy, since all else flows from it. The following would seem to be a small news item in comparison with other events and risks detailed further below, but it’s emblematic of the new era we’re entering.
Major oil companies, including ExxonMobil, Shell, and BP, have announced that they will cease collaborating with the Russian petroleum industry, which includes state-owned energy giants Lukoil and Gazprom. This will likely have implications more far-reaching and long-lasting than President Biden’s ban on imports of Russian oil and gas to the US. Russian oil and gas resources and production are enormous (the country supplies over a tenth of the world’s oil and 7 percent of the world’s gas), but many of the country’s oil and gas fields were initially developed decades ago and are no longer able to maintain former rates of flow. In 2021, the Russian Energy Ministry forecast that the nation was at peak petroleum production levels and would probably never exceed pre-Covid rates of output…
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