The cause of the crisis in the energy sector is not Ukraine or any other political reason, but a colossal amount of underinvestment in the industry
A photo: REUTERS
Any constructive political and economic reports are divided into three large groups. The first, the most numerous, is about the fact that “everything will be as before.” The second is “let’s figure out what’s really going on.” And the third, the rarest: “the future awaits us such and such” (option, “what to do, where to run”). Of course, I do not take into account destructive options, such as “Save yourself who can!”.
Since we have been living for a long time (in reality, since the autumn of 2008) in conditions of a constant economic crisis (not to be confused with a financial one!), you involuntarily observe those forums where there are (still far from dominance!) reports of the second type. And one of them is the traditional Verona Eurasian Economic Forum, which is already 15 this year. Which this year, for obvious reasons, was held in Baku.
Its main speaker in the energy sector is the head of Rosneft, Igor Sechin, who has been doing brilliant market analysis for many years. So this year in his report “Global Flood in the energy market. The second kidnapping of Europe” he repeated what he had already said more than once, both last year and the year before: that the cause of the crisis in the energy sector is not Ukraine or another political reason, but a colossal amount of underinvestment in the industry. One of the reasons for this is the irresponsible and adventurous policy of an accelerated “green” transition. And he added that anti-Russian sanctions became the most powerful additional catalyst for the energy crisis and inflation in general…
PRICE CEILING – AN ATTEMPT ON SOVEREIGNTY
In addition, Sechin said what today in the West, and in Russia, oddly enough, it is not customary to say that there is no longer a single energy market. “There are no rules, politics has completely destroyed the economy. The energy market is the clearest illustration of this: the culminating sanctions pressure has already resulted in subversive activities – in what happened to the European gas transportation system – Nord Stream. High volatility, which has been noted for the past decade, has now become “unlimited”.
“In fact, the introduction of ceilings is an attack not only on the foundations of the market, but also on the foundations of sovereignty. That is, the idea, in fact, is to abolish the sovereign rights of countries to their own resources, because the “right” countries that lack resources need them more than the “wrong” ones. The US itself, of course, is not affected by any restrictions. Although in Europe a number of experts and politicians are already openly accusing the United States of profiting from the energy crisis they themselves provoked – that is, from the problems of their allies.
“Sanctions are the destruction of the foundations of corporate law. Arbitrary illegal seizure of assets from designated sanctioned companies, individuals and entire countries, in fact, is the abolition of the inviolability of private property. We are witnessing the undermining of the foundations of the legal and judicial system as a result of the abolition of the independence of the judiciary. Circular letters from the White House and the European Commission are reproduced without change in the form of court decisions. The cynicism has reached such an extent that the persons included in the sanctions lists are now deprived of the right to protection with the help of lawyers.”
These quotes are enough to understand the level of the forum, but I would like to note one extremely interesting circumstance. The fact is that political reports, in general, proceeded from the logic that there would be no return to the “old times”. Speakers did not always imagine what the future would be like, but the fact that it would be different followed from almost every speech.
But the economic reports, in many respects, were different. Some were completely out of touch with reality, they could just as well have been heard five or ten years ago. Some kept appealing, explicitly or implicitly, to the fact that the situation was, after all, normalizing. And besides Sechin’s speech, there were probably no reports that would explain the essence of the ongoing crisis processes. No wonder I gave such lengthy quotes from the report of the head of Rosneft. In many ways, the report of the founder of the Verona Forum, Professor Antonio Fallico, turned out to be consonant with him.
The forum was not in vain held this year in Baku, and not in Verona, the total censorship of the West, which was talked about a lot in political reports, frightens many experts whose lives depend on the loyalty of the state. And it’s scary. The same Sechin noted that BP (far from the weakest player in the Western world) publicly refused to participate in the capital of Rosneft. But he added that BP is not yet going to implement this “own” (and in reality, as is clear, imposed by external forces) decision, it has left the management bodies of Rosneft, but continues to remain a “shadow” shareholder. And it is clear why – having spent about 10 billion, BP has already received more than twice as much. But – to refuse the imposed decision (yet?) cannot.
In general, against the background of other international conferences, the current Verona Forum looked very worthy, because, after all, many topics, primarily related to energy and logistics, were analyzed at a deep professional level.
THE FUTURE OF A GREEN AGENDA
In conclusion of this short column, I would like to note that the appearance of the “green” agenda in itself, and this, by the way, is also the logic of Sechin’s report, is due to the fact that the world economy has exhausted the main mechanism of development that has been operating since the beginning of the 1980s. 1990s, stimulating private demand through the issuance of the dollar. And as a result, developed countries, taking advantage of the technological advantage, decided to support it by redistributing world resources in their favor. This is where all the “green” ideas came from, everything else, including the energy crisis, is just a consequence.
And from this point of view, the main issue that I would like to discuss and discuss is the question of what the new development mechanism will be like and how the transition period will affect the standard of living of the population in different countries and the functioning of the dollar (Bretton Woods) system. The previous transition was in the 1970s and was remembered for the “oil shock” of the early 1970s, and the combination of a recession with high inflation (“stagflation”), and a drop in the incomes of the population of developed countries. And a natural question arises: in the near future, we will face problems similar in scale and duration?
There is no simple answer to this question, but I am very glad that such forums as Verona are being held. The speakers of the session “The New Reality of Commodity and Energy Markets” managed to raise acute problems that will be very relevant in the coming years.