On today’s show we are taking another look energy markets and how energy costs affect the price of virtually everything.
I’m completely in favour of the idea of transitioning from burning oil, gas, biomass and coal to cleaner forms of energy. In the US there are still over 1,000 active coal mines. This is approximately half of the number of coal mines that were in operation in the year 2000.
If you go back 15 years, western Europe produced more natural gas on the continent than was imported from Russia in 2021. They outlawed fracking, in order to help the environment and now find themselves having to buy natural gas from the US at a much higher price where fracking is the primary source of the natural gas. The energy security situation in Europe is a function of a series of policy decisions made over the past two decades, more than it’s the fault of Russia or any one nation.
Last week the OPEC+ cartel announced a 2M barrel per day reduction in production quotas. The reaction in the US was swift. Prices at the gas pump jumped almost immediately.
Many in the media have misinterpreted the announcement to mean that there will be a reduction of 2M barrels per day of oil production. The OPEC members have done little to correct the public perception.
The truth is, that the announcement was a reduction in production quotas, not production volumes. Even before the announcement, the OPEC+ member countries were producing 3.5M barrels per day less than the production quota.
So in theory, a reduction in a quota would have no impact at all on the actual amount of oil being exported into world markets by OPEC+. You have to remember that OPEC+ includes Russia.
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Host: Victor Menasce
email: [email protected]
