The global energy crisis that started shaping up in Europe with the war in Ukraine as the main trigger seems to be here to stay. The solutions the European governments have put in place, such as capping energy bills and taxing energy companies, are still unproven solutions.
Meanwhile, the CEO of the state oil giant Saudi Aramco, Amin Nasser, said on September 20 that caps on energy bills and taxing energy companies are short-term solutions, which may not actually help solve the global energy crisis.
“Freezing or capping energy bills might help consumers in the short term, but it does not address the real causes and is not the long-term solution. And taxing companies when you want them to increase production is clearly not helpful.”
Ukraine not the sole reason for energy crisis
Additionally, the Saudi CEO claimed that the war in Ukraine is not the only reason why we are facing an energy crisis. Namely, according to him, years of underinvestment in the hydrocarbon sector and a lack of ready alternatives are the main culprits.
“Even if the conflict in Ukraine ended today, the energy crisis would not end. The real causes of energy insecurity are under-investment in oil and gas, no ready alternatives, and no backup plan.”
Too late with investments
Despite the strong global headwinds, the demand for oil seems to be booming, and with the healthy demand and the production under-capacity, as Nasser claims, is leading to higher energy prices.
European strategy of shaving off excess earnings from energy companies and redistributing those profits to ease the burden on consumers could actually offer some short-term relief, but capacity expansion seems to be the surest way to ease out of the energy crisis.
Whether investment into additional production capabilities of carbon energy companies will offer a convenient excuse for governments to neglect their climate goals remains to be seen.
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