2 ms·

> new oil and gas exploration Ugh... Positive feedback loops.

• jillesvangurp 5y ago
  Only as long as the stuff is still worth something. Carbon taxes and alternatives could make this a lot less profitable over time. The Russian economy is very sensitive to the price of oil and gas. If demand collapses, prices go down below the point where exploiting these resources is cost effective. The problem is that that is true for everybody else too. That's why prices are high currently because the same is true in Texas where expensive fracking only makes sense as long as prices are very high because fracking is expensive. Which is why everybody else (including Russia that can produce cheaper) is pressured to limit supply. Occasionally, one country (Russia last year) decides to start dumping oil on the market and panic kicks in. It's the one geopolitical tool Russia has left and they wield it well. That's why the baltic gas pipeline is a big deal as well. The Germans built that to not get pressured into buying expensive US liquid gas while they (slowly) untangle their domestic infrastructure from natural gas. However, that's going to take decades but Russia's behavior is bringing a sense of urgency for getting that done. The good news is that high prices make renewables much more attractive and high price volatility makes oil/gas investments a lot more risky and unpredictable. With prices swinging between too high and too low, Investors have been voting with their money for a while now and moving their wealth elsewhere. Russia can't help of being part of the solution here by basically acting against everybody else, they accelerate the demise of oil/gas, cause price instability, and cause their main customers to question the wisdom of their dependence on Russian resources. The last decades of this industry in demise are going to be ugly though.