Europe is phasing out its reliance on Russian fossil fuels and Moscow is cutting back existing supplies.
The world has suffered energy shocks caused by conflict, particularly during upheaval in the Middle East in the 1970s, but this time the fallout has been particularly hard to contain.
The 1973 energy crisis during the Arab – Israeli war caused oil prices to leap from about $3 a barrel to $11, or from about $20 to more than $70 in current prices.
The US and Europe at the time had very few means to respond, aside from fuel rationing and stockpiling supplies, which created transatlantic tensions.
Russia has stopped supplying, or lowered those supplies, so that’s about 70 billion cubic metres of natural gas that has simply been taken off the market. And because it was normally supplied by pipeline, it can’t just go elsewhere. And so, there’s a gap. There’s a supply-demand gap. There’s a challenge in that context.
Europe depended on Russia for about 40 per cent of its gas demand, about 155 billion cubic metres, before the war.
The EU responded to the crisis quickly, reducing gas consumption by 20 per cent and sourcing supply from elsewhere. From the US, the EU doubled its gas imports — one of many rapid changes to the energy landscape.
By comparison, the two energy crises of the 1970s a second in 1979 followed the revolution in Iran left the West with limited options, including a US military doctrine of basing significant military power in the oil-rich Middle East.
The US and the UAE signed the Partnership for Accelerating Clean Energy, a $100 billion plan to implement 100 gigawatts of power generation in the region and developing countries.
Renewables and green hydrogen are the most interesting prospects because they combine addressing the climate crisis, lowering our emissions, while also addressing the energy prices and adding energy supplies and green energy supplies to the market. So, there’s significant scope I think for a strengthened partnership.