Volume 14 Issue 6
November 12, 2022 – December 4, 2022
Andrew Ji ‘25 | Wilder Crosier ‘25 | Cameron Farid ‘26
G7 Coalition agrees to $60 per barrel price cap for Russian oil
December 3, 2022 | Reuters | Jan Strupczewski
The G7 and Australia on Friday said that they had reached an agreement to cap the price of Russian seaborne crude oil at $60 per barrel, after the lone holdout in the EU, Poland, expressed support for the price cap despite it being higher than desired. After the finalization of the agreement over the weekend, the coalition announced that the cap would take effect on Monday “or very soon thereafter,” with the goal of the price cap being to reduce Russian income from selling crude oil, while preventing a global surge in prices. The US Treasury Secretary, Janet Yellen, stated that the cap would benefit low and middle income nations that have seen the highest spikes in energy and food prices, while the chair of the Russian lower house foreign affairs committee said that the EU was jeopardizing its own energy security.
There are mechanisms attached to the agreement to ensure that it stays updated, with it being reviewed every two months and updated to stay “at least 5% below market rate”. The previous draft version of the deal had not included the price adjustment mechanism, and asked for a price cap of $65-70. US officials stated that the deal was “unprecedented” and demonstrated the surprising resolve of the group to oppose Putin’s ongoing invasion of Ukraine. - AJ
Gas Prices Are Dropping: Here’s How Much Lower They Might Go
December 2, 2022 | The Wall Street Journal | Joseph De Avila
As of December 2, 2022, the average cost of regular unleaded gasoline in the US was $3.43, near prices before Russia’s invasion of Ukraine, an event that sparked an energy crisis across the world. After paying over $5 per gallon in June of this year, consumers can benefit from this well needed break. Some industry leaders, like Patrick De Haan, head of petroleum analysis at GasBuddy, expect prices to continue dropping toward $3 by the end of the year, a potential holiday treat for Americans. There are several factors driving this price drop, including decreased fuel demand due to economic concerns, increased US refining capacity, and a lack of Chinese demand due to COVID lockdowns. However, that’s not to say this drop is guaranteed, or that prices will remain low. The Russian oil price cap from Europe and the US, a more rapid reopening of the Chinese economy, or another cut in production by OPEC countries all have the potential to send fuel prices back up for Americans. Additionally, fuel costs typically rise seasonally starting in February, which may make this grace period for consumers short lived. -CF
The New Battleships in Europe’s Energy War Are in Short Supply
December 1, 2022 | The Wall Street Journal | Carol Ryan
As Europe tangles with their Russian-induced energy crisis, many EU countries are relying more on liquid natural gas (LNG) for their power needs this winter. To improve their imports of LNG, countries have been eagerly chartering floating storage and regasification units, known as FSRUs. These versatile ships convert natural gas from cold slush into its usable gaseous state. Historically, FSRUs have appealed to developing countries because they are cheaper than onshore gas terminals. In the past year, day-rates for use have doubled for FSRUs as Europe gobbles up the vessels. Twenty-one of the fifty FSRUs currently in use today are installed or headed to the EU. Germany has chartered six units and the Netherlands is currently installing two as both countries continue to struggle with the Kremlin’s choice to shut off pipelines. While the maritime imports of LNG may cushion gas prices in the EU, the hike in price for regasification units unfortunately forces developing nations to rely more heavily on dirty forms of energy. –WC