As they say at the Oscars, and the winner is…. United States. Any country that is sitting on energy resources present in the subsoil has an advantage, something that has been evident since the industrial development of the last century. But in the coming years, power relations will change radically.
Twenty years ago the United States, which has always been able to count on oil production, had to import almost a third of its energy sources from abroad for its enormous domestic consumption. But after the fracking boom in the 2000s, its energy dependence has plummeted and currently only 7% comes from outside, according to the World Bank, a level not seen since the late 1960s.
If we focus only on fossils, now the US has even become a net exporter of oil and is the world’s leading producer. He no longer needs Saudi Arabia’s complacency.
It was not something obvious to foresee. In the 1970s, the OPEC cartel countries (led by the Middle East) made their voices heard. Just by turning off the black gold tap a little they were able to unleash the storm in the barrel. Today its influence has decreased significantly: OPEC represents 34% of world exports, a figure that in the seventies reached close to 60%. In fact, its successive production cuts in recent months are barely reflected in prices. Because countries (especially Western ones) consume fewer fossils and try to diversify their sources of supply.
In this new race for energy sovereignty, the big loser continues to be Europe. It depended on third countries for its supply decades ago and continues to depend now at the dawn of the transition to the new energy model. The EU is a net importer of energy. According to Eurostat, the degree of energy dependence from abroad in 30 years has increased from 50% to 55.5%, much higher percentages than the rest of the economic blocks. By country, Malta stands out with 97%, but there is also a high degree in Ireland, Greece, Italy and Spain, with percentages higher than 70%. France is in a better position than the rest thanks to its historic commitment to nuclear power plants, but sovereignty is still far away.
“This dependence can constitute a source of vulnerability for European economies: natural gas, uranium, oil, coal, all of them scarce within the EU, difficult to replace and concentrated in few suppliers,” the Bank of Spain stated in a recent report. . Russia was the largest energy supplier to the EU in 2019. But the war in Ukraine has changed everything and now Europeans are looking for other partners for their energy supplies. Currently the largest energy supplier in Europe is the USA (17% of the total oil consumed in Europe and almost half of the LNG come from the North American market)
At the same time, other problems have been created. In particular, increasing electrification has increased European dependence rather than decreasing it. Because, when talking about gas dependence, it was 51% in 1990; today it has risen to 83%.
The one who is in an ambivalent position is China. On the one hand, its energy dependence on abroad has skyrocketed in twenty years (a consequence of its rapid economic development). But in absolute terms, Beijing only buys 20% of the energy it needs outside its borders, a small share compared to Europeans. Likewise, it has been investing for years not only in renewables (solar panels and batteries) but also in nuclear, so in the medium term the Chinese giant could recover part of the control and sovereignty.
Regarding fossil energy specifically, Europe has indeed reduced its consumption. The percentage of the gross energy available has fallen in thirty years from 82% to 71%. As Michael Cembalest, an energy specialist at JP Morgan, analyzed, “the percentage of fossil fuels as part of global energy is falling by 0.40% each year following progress in electrification. We are going towards the electrification of everything. If something can be electrified or decarbonized via wind, solar or storage, it will be done.”
In this long-distance race, sitting on oil will be less important than sitting on minerals. That is why China breathes more relieved.
