European natural gas prices soar, international oil prices fluctuate
In-depth adjustment of global energy supply and demand map
The price of natural gas in Europe has soared, setting a new record high; the international oil price fluctuated at a high level, once rushing to a historical high of $130 per barrel, and then fell to less than $100 in a "roller coaster"... Recently, the contradiction between global energy supply and demand has intensified, and energy prices have been high fluctuation.
The World Bank report shows that in the past two years, global energy prices have experienced the largest increase since the 1973 oil crisis; in 2022, the price of natural gas in Europe will be twice as high as in 2021, and the price of coal will rise by 80%, both hitting record highs.
How do you view the many changes in the global energy security situation?
The global energy supply and demand map is deeply adjusted. How should my country ensure national energy security and promote high-quality energy development?
The reporter interviewed Zhao Hongtu, director of the Energy Security Research Center of the China Institute of Contemporary International Relations.
Behind the sharp fluctuations in global energy prices are the drastic changes in supply and demand. It is easier said than done in Europe to reduce its dependence on foreign fossil energy.
Reporter: What is the main reason for the recent sharp fluctuations in global energy prices?
Since last year, the "energy shortage" faced by Europe has been particularly serious. What are the characteristics and background?
Zhao Hongtu: Affected by geopolitical tensions, increased sanctions, OPEC's production increase and many other factors, international energy prices have recently experienced a "roller coaster" swing.
As a commodity, the price of energy is mainly determined by the fundamentals of supply and demand. Therefore, behind the large fluctuations in global energy prices are actually drastic changes in supply and demand conditions.
There are many factors that affect supply and demand, including geopolitics, world economy, extreme weather, incidents, etc. For example, in early 2020, the new crown epidemic swept the world, the world economy shut down, energy demand fell off a cliff, and prices of crude oil and natural gas fell sharply; in 2021, The global economy has begun to recover, driving a rebound in energy demand. Under the influence of many factors such as the lag in production capacity recovery, the prices of oil and gas have rebounded sharply.
Against this background, geopolitical conflicts and energy sanctions have further pushed up international energy prices and exacerbated the "energy shortage" in Europe.
The EU is highly dependent on external energy. Although the proportion of renewable energy is increasing, in the past five years, about 57% to 60% of the EU's energy consumption has relied on fossil energy imports.
In addition, Europe has implemented a relatively aggressive energy transformation strategy. European countries, mainly represented by Germany, have been promoting energy transformation, and the proportion of renewable energy is at the leading level in the world.
However, under the existing technical conditions, the higher the proportion of renewable energy, the worse the stability of energy security, which is determined by the characteristics of renewable energy.
Therefore, once emergencies such as extreme weather occur, the energy dilemma in Europe will become prominent.
Reporter: The EU recently stated that it intends to reduce external dependence on fossil energy by reducing the use of fossil fuels, diversifying oil and gas supply channels, and accelerating the development of renewable energy.
How difficult is it to achieve this goal?
Zhao Hongtu: Taking the data of 2019 as an example, the EU's overall dependence on external energy is as high as 61%, of which the external dependence on natural gas is as high as 90%, the external dependence on oil is 97%, and the external dependence on coal is 70%.
This situation is the result of a combination of factors such as history, geographic location, and resource endowment, and cannot be effectively changed in a short period of time.
From the perspective of energy substitution, although the development of renewable energy in Europe is at the forefront of the world, renewable energy is still "more than enough" to change Europe's external energy dependence, mainly because it is not only insufficient in total amount, In addition, there are shortcomings such as unstable supply and high cost of use, and it will not be able to undertake the important task of ensuring European energy security for a considerable period of time.
Therefore, in a short period of time, European energy security cannot get rid of its dependence on fossil energy.
From the perspective of energy supply diversification, Europe also faces challenges.
Take natural gas as an example. In 2021, natural gas from Russia will account for 45% of the EU's total gas imports, compared with about 40% in the past few years.
Other sources of gas imports to the EU are Norway (23%), Algeria (12%), the United States (6%) and Qatar (5%).
It is not easy to find a source of natural gas that can replace Russia on a global scale, because the potential of major natural gas resource countries is limited, and the production capacity is approaching saturation, and such a large gap cannot be filled in a short period of time.
Reporter: The EU and the US recently announced an energy cooperation plan.
According to the agreement, the United States will increase the supply of 15 billion cubic meters of natural gas to the European Union within this year, and the United States promises that Europe can obtain 50 billion cubic meters of liquefied natural gas every year by 2030.
Could this ease the EU's energy woes?
Zhao Hongtu: This is also "a drop in the bucket" for Europe. No country can "save" Europe by itself.
Europe imports about 400 billion cubic meters of gas a year, and beyond 2022, it will be very difficult to replace gas from Russia with a combination of alternative supplies and reduced gas demand.
With gas storage stocks severely depleted, the outlook for gas supplies in Europe next winter is grim.
U.S. liquefied natural gas "far water does not quench the thirst of near".
There is an "impossible triangle" in the field of energy security, that is, there is a certain conflict between the economy, security and environmental protection, and it is difficult to balance them.
From an economic point of view, Europe will obviously have to pay more for abandoning affordable Russian gas to buy high-priced US LNG; investing in the construction of new LNG receiving terminals also requires money and time.
Eastern European countries, in particular, are mostly landlocked countries and lack infrastructure such as direct import of LNG and transshipment; even if they can be transported to Eastern Europe, the high cost of liquefaction, transportation, gasification and other processes will make most Eastern European countries unaffordable.
How the US promises to be fulfilled is also a question, and US companies are likely to be powerless.
The bulk of U.S. oil and gas exports have now gone to the European market due to soaring demand in Europe and higher prices than the rest of the world.
U.S. oil and gas exports are approaching the ceiling of their export capacity, and there is not much room for improvement.
Even if the U.S. capacity and shipments can keep up, the 28 large import terminals in Europe seem too late to "eat it all".
Because most of these import terminals are located in coastal areas, there are insufficient supporting facilities such as pipelines that can be used for "delivery".
Reporter: Some analysts say that the United States is the biggest winner of this round of energy crisis. What do you think?
Zhao Hongtu: During the Russia-Ukraine conflict, the United States watched the fire from the other side, and in order to contain Russia, it did not hesitate to "use Ukraine as a chessboard and Europe as a table", and made a lot of money from it.
This incident can be said to be "the United States carries the flag, the allies contribute, and Europe pays the bill", which can be called "three birds with one stone" - it not only contained Russia, but also hit the European Union, while reaping its own economic benefits.
The US's energy and geopolitical interests in Europe are intertwined. It not only hopes to maintain the stability of the international energy market to avoid rising inflation, but also hopes to use the current opportunity to expand the European natural gas market without giving up its strategic containment of Russia.
The United States has been coveting the European energy market for a long time, especially in terms of natural gas, intervening in European-Russian energy cooperation. Before the outbreak of the Russian-Ukrainian conflict, it has been trying to block Russia's "Nord Stream-2" natural gas pipeline to Europe. One of the purposes is to compete with Russia. European natural gas market.
The United States has not discussed its allies in terms of strategy, and Europe has suffered greatly: in terms of strategy and energy, its dependence on the United States has increased; external sanctions have "injured the enemy by one thousand and self-destructed eight hundred", and energy security has been seriously threatened; internal differences have increased , the national economy bears high costs, including soaring energy prices, public protests, economic damage, and increased risk of being countered, etc.
The International Energy Agency also said it would stifle energy supplies and cause "months or even years of pain" in Europe.
Energy security has been a priority since the two oil crises. Energy shortages and rising prices will drag down the world's economic recovery, disrupt supply chains and increase inflationary pressures.
Reporter: How do you view the impact of geopolitics on the global energy market?
Zhao Hongtu: As a special commodity with strategic attributes, oil and gas prices are not only affected by market supply and demand, but also closely related to the geopolitical situation.
Historically, the two oil crises are typical geopolitical events.
The background of the first oil crisis was the fourth Middle East war. This oil crisis hit the western economy hard and deepened the world economic crisis. The golden economic growth period of the western countries for nearly 30 years after World War II came to an abrupt end after the oil crisis. stop.
The background of the second oil crisis was the "Iraq-Iraq War", the oil supply was greatly interrupted, and the oil price rose sharply.
The concept of energy security also began to receive unprecedented attention after the two oil crises.
In the short term, the impact of geopolitics on the energy market is significant. The specific impact and duration depend on the severity of the geopolitical event, the market environment at that time, and the degree of energy shortage caused by it.
In the long run, the energy market and price are ultimately determined by economic laws and the relationship between market supply and demand.
Once the conflict has eased, the geopolitical premium will also gradually fall back.
Reporter: The impact of energy shortages and rising prices continues to ferment.
What detrimental hazards will the energy problem bring?
Zhao Hongtu: First, it is a drag on the recovery of the world economy.
According to the National Institute of Economic and Social Research in the United Kingdom, this round of sharp rise in energy prices will make the global economic recession a reality, the global inflation rate may be pushed up by at least 2% in 2022, and the total global GDP may drop by 1% in 2023.
The risk of economic recession in Europe has emerged, and the economic damage is much higher than that of other regions.
The second is to disrupt the supply chain, increase the cost of downstream products, and increase the operating pressure of enterprises.
Affected by soaring natural gas prices, European steel, chemical and other industries have been forced to cut production.
Oil is a basic energy source and an important chemical raw material. The increase in upstream crude oil prices will be transmitted downstream along the industrial chain of "crude oil extraction - oil refining - chemical industry - textile, machinery and other industries", increasing the production cost of the downstream industry and reducing its cost. Profitable space.
The third is to increase household energy consumption expenditure and increase inflationary pressure.
For example, the rise in crude oil prices will eventually be gradually transmitted to the consumer side through the production chain, resulting in an increase in household energy consumption expenditures and increasing pressure on cost-push prices.
The current global energy issue highlights the long-term and complex nature of the international energy transition
Reporter: How do you view the impact of current energy issues on the global energy transition?
Zhao Hongtu: The current global energy issue further highlights the long-term and complex nature of the international energy transition.
Due to the challenges of cost, technology and many policy variables, there will be many new energy security issues in the process of low-carbon transition, but the general trend is irreversible.
The history of energy development and utilization in human society has experienced a process from single type to multiple types, energy efficiency and carbon content from low to high.
Driven by the goal of carbon neutrality, the main energy source will accelerate the transformation from fossil energy to low-carbon energy, and the international energy structure will be further low-carbon, digitized and diversified.
In the long run, the impact of geopolitical conflicts on the international energy and carbon markets will inevitably promote the development of clean energy. However, in the short and medium term, the resistance to the global low-carbon transition will increase. The rebound of coal power and the fall in global carbon prices will boost the growth of carbon emissions. Disrupting the pace of low-carbon transition in some countries.
Coal will become an alternative to natural gas in Europe, with some countries restarting decommissioned coal-fired and nuclear power plants.
The international competition for natural gas has also driven the spot price of fuel for heating and power plants in Asia and other places to record highs, and some countries have been forced to switch to fuel oil, coal and other high-emission fuels, delaying the transition to green energy.
In addition, rising prices of key minerals have pushed up the cost of new energy, and the development cost of clean energy and new energy vehicles has risen significantly, increasing resistance.
Reporter: In the context of global carbon peaking and carbon neutrality, how to understand the connotation of energy security?
Zhao Hongtu: The two oil crises in the 1970s made the international community pay unprecedented attention to the issue of energy security. Therefore, the earliest concept of energy security was oil-centered and mainly characterized by supply disruptions caused by geopolitics.
After the two oil crises, as the international oil market has become more and more perfect, environmental issues such as climate change have received more and more attention, and the issue of energy transition has been put on the agenda, emphasizing the economic and environmental protection of the energy market.
Therefore, on the basis of "security of supply", "security of use" is also included in the concept of energy security.
In the mid-1980s and the late 1990s, there were two "reverse" oil crises in which oil prices plummeted, which had a great impact on the economies of oil-exporting countries, and the oil market gradually shifted from a seller's market to a buyer's market.
This derives another layer of connotation in energy security - "demand security".
In general, with the deepening of the interdependence between supply and demand, the improvement of the international energy market and the development of global economic integration, the commodity attributes of oil and other energy sources have become increasingly prominent, and the supply disruption in the traditional sense will be less. Price volatility.
Therefore, in terms of connotation, energy security has been gradually expanded to include security of supply, security of use, security of demand, etc., from the original emphasis on security of supply.
In the context of global carbon neutrality, the connotation of energy security is further enriched, and many new energy security issues have emerged.
For example, in terms of types, energy security originally focused on oil, then natural gas was added, and now it includes renewable energy and electricity.
In the context of a diverse energy structure, the concept of energy security is bound to be multi-dimensional and comprehensive.
In a sense, the energy security that focused on supply security in the early days is a lower level of energy security, and now we need a more systematic and higher level of energy security.
Build a modern energy system on the premise of ensuring security, coordinate the promotion of low-carbon transformation and supply guarantee, and strive to build a national energy security barrier
Reporter: What is the current situation of my country's energy development?
Zhao Hongtu: After years of development, my country has formed a multi-wheeled energy supply system driven by coal, oil, natural gas and non-fossil energy, which effectively guarantees economic and social development and the energy demand for people's livelihood.
At the same time, my country's energy security is intertwined with old and new risks, the shortcomings of oil and gas resources have existed for a long time, regional and periodical energy supply and demand problems have occurred from time to time, and non-traditional security risks such as network security have become increasingly prominent. It is particularly important to build a high-level energy security guarantee system.
Taking good energy jobs and ensuring energy security has always been the focus and core goal of my country's energy system construction.
Recently, the "14th Five-Year Plan for Modern Energy System" has been approved by the State Council and issued for implementation.
During the "14th Five-Year Plan" period, we must adhere to the new energy security strategy of "four revolutions and one cooperation" proposed by General Secretary Xi Jinping as the fundamental principle, and fully implement the overall implementation of the Party Central Committee and the State Council's overall plan for building a clean, low-carbon, safe and efficient energy system. Thinking and specific requirements, take effective measures to ensure national energy security, accelerate the construction of a modern energy system, build an energy power, help achieve the goal of carbon peaking and carbon neutrality, and support high-quality economic and social development.
Reporter: What are the implications of global energy market fluctuations for my country to build a barrier to energy security?
Zhao Hongtu: Energy security is the basic requirement and bottom line of energy transition.
Daniel Yerkin, a well-known American energy scholar, mentioned that this round of energy crisis has raised two fundamental questions: whether the pace of energy transformation pursued by the world today has exceeded the speed that the global economy can accommodate; Whether the investment in conventional resources is insufficient at the same time as the transformation.
In the long run, the development of new energy and renewable energy can better ensure the security of national energy supply, but the energy transition needs to be carried out gradually and steadily. Radical and excessive energy transition will inevitably bring about energy supply shocks.
Under the current technical conditions, the higher the proportion of renewable energy in countries, the greater the security risk of traditional energy supply.
The soaring energy prices and power shortages in Europe and the United States in the second half of 2021 are not only the result of the imbalance between supply and demand caused by multiple factors, but also have something to do with the accelerating international low-carbon transition, the increasingly aggressive environmental protection policies and energy interventionism in Europe and the United States.
Security is the premise of development, and development is the guarantee of security.
The Central Economic Work Conference pointed out that achieving carbon peaking and carbon neutrality is an inherent requirement to promote high-quality development.
The gradual withdrawal of traditional energy should be based on the safe and reliable replacement of new energy, and it should not be broken first and fall into the passivity of energy security.
In the process of promoting the energy revolution and accelerating the construction of an energy-powerful country, we must implement the overall national security concept, be based on the basic national conditions of coal as the mainstay, adhere to the principle of establishing first and then breaking down, and make comprehensive plans, and build a modern energy system on the premise of ensuring security. Promote low-carbon transformation and supply security, and strive to build a national energy security barrier.
Our reporter Chai Yaxin