Anna Rathbun, Chief Investment Officer
What's the Difference Between Money and Energy?
Energy has been a hot topic this year. Since 2021, energyprices have been rising due to multiple factors including the post-pandemiceconomic boom, disrupted supply chains, reduced investments, and poor weatherconditions. Russia began withholding gas supplies to Europe months ahead of itsinvasion of Ukraine, and its subsequent attack has only made the situationworse.
Russia is by far the world’s largest exporter of fossilfuels, and a particularly important natural energy supplier to Europe. In 2021,a quarter of all energy consumed in the EU came from Russia, and as a result ofthe war, the cost of energy in Europe has skyrocketed. While prices are nolonger at their peaks, upcoming European sanctions on Russia mean that theoutlook is uncertain.
That leaves many of us wondering: how will this crisis behandled? Ideally, these countries would be able to aid their strugglingcitizens, but with the economy ravaged by the COVID-19 pandemic, budgetdeficits and rising interest rates mean that many policymakers’ hands are tied.
Several countries have increased gas imports fromalternative producers, expanded the use of coal for power generation and revivednuclear plants set to be de-commissioned. EU members have also introduced gasstorage obligations and agreed to cut gas and electricity demand by promotingrenewables and efficiency improvements.
War always creates blockades in terms of trade, andsometimes these problems can be solved by borrowing money. While we might beable to print more money during a crisis, we will never be able to borrow moreoil or natural gas. That brings us back to the title of this article: thedifference between money and energy is that we can’t print more energy. There’sno negotiating with Mother Earth; we have to figure this one out on our own.
Register for our upcoming webinar, Conversations:Energy – One Thing You Can’t Print to learn more about therelationship between energy and policy. In this webinar, Anna Rathbun willexplore the complex web of energy supply and trade, variables that drive pricesand the limitations of policy in addressing the worldwide energy shortage.