Blog Post

The Russia and Ukraine war is making a big impact on the global energy market. Countries in the European Union are especially vulnerable due to their reliance on Russian natural gas. The United States has put numerous economic sanctions on Russia, which further drives up the energy market costs. Many feel that working with other oil-exporting countries is key to reducing the reliance on Russian oil amid a trade war.

Relationship Between Russia and the European Union

Choosing to rely on gas from Russia was a major strategic mistake by the European Union. Russia supplies Europe with the vast majority of natural gas, which makes it nearly impossible to apply a trade ban with Russia without significantly increasing the cost of energy. The European Union has to begin making plans to find other sources of energy to avoid their overreliance on Russian natural gas.

Oil Import/Export as a Tool of War

The European Union and other Western allies ( Australia, Japan, and South Korea.etc) are searching for ways to increase their energy purchases from non-Russian companies. The Europeans, especially the Germans, are exploring liquid natural gas imports from Qatar and the United States. Gaining access to additional imports increases their flexibility in finding new energy solutions to lessen their need for Russian oil and gas. Focusing more on renewable energy is also essential, but this process takes a lot of time, and it isn’t a short-term fix. In the meantime, oil imports and exports will continue to play a major factor in being a tool of war due to the impact of the Russia Ukraine conflict.

Ukraine – Russian War and the Stock Market

The fallout of the war between Russia and Ukraine will continue to impact the stock market. Initially, the stock market took major losses during the beginning stages of the war, but it’s now become more stable. However, the uncertainty of the Ukraine Russian war and the impact of economic sanctions can still create significant risks for those investing in the stock market. US oil imports to the European Union can help stabilize the energy market, yet there are many concerns, as no one knows how long this war between Russia and Ukraine will last.

Future of Clean Energy Policies

One of the main challenges of transitioning to cleaner energy to combat the impact of climate change is that it doesn’t have as strong political support with constituents compared to other topics. Public surveys show that many voters prioritize other issues, whether it’s immigration, health, military spending, and Covid-19 response, compared to focusing on climate policy or the energy market. Focusing on further increasing energy prices in the short-term with low-carbon alternatives isn’t a priority for most politicians due to risks of negative public approval despite the long-term benefits.

Can Nuclear Energy Be Part of the Solution?

Nuclear energy production doesn’t emit any greenhouse gases, which makes it a viable alternative compared to fossil fuels. However, some people remain concerned about the use of nuclear energy due to the potential for deadly accidents and the inability to find a permanent disposal repository for storing nuclear waste. Ukraine is home to 15 nuclear reactors, which also creates significant risks due to being in the middle of a war zone.

Energy Markets and the Ukraine – Russian War

The Russia and Ukraine war is making a big impact on the global energy market. Countries in the European Union are especially vulnerable due to their reliance on Russian natural gas. The United States has put numerous economic sanctions on Russia, which further drives up the energy market costs. Many feel that working with other oil-exporting countries is key to reducing the reliance on Russian oil amid a trade war.

Relationship Between Russia and the European Union

Choosing to rely on gas from Russia was a major strategic mistake by the European Union. Russia supplies Europe with the vast majority of natural gas, which makes it nearly impossible to apply a trade ban with Russia without significantly increasing the cost of energy. The European Union has to begin making plans to find other sources of energy to avoid their overreliance on Russian natural gas.

Oil Import/Export as a Tool of War

Initially, Germany produced around 25% of its electricity by using nuclear energy. However, they stopped in March 2011, as the government passed a law to phase out the use of nuclear power due to the Fukushima accident that happened in Japan. The increasing cost of Russian oil should motivate Germany to begin focusing on nuclear energy to help stabilize the energy market. Unfortunately, many feel that the decision to stop using nuclear energy in Germany was short-sighted, even if there wasn’t a Ukraine and Russian war.
Other countries are also considering investing in nuclear reactors, such as the Czech Republic, Poland, France, and the U.K. The transition to nuclear energy provides an opportunity for American nuclear companies to better serve European countries looking for an alternative to Russian oil and gas. While Russia was one of the top competitors for nuclear exports due to its aggressive financing packages, they are now falling out of favor globally due to the war against Ukraine.

Closing Thoughts

Only time will tell how the Russia and Ukraine war will continue to affect the energy market and stocks such as Exxon Mobil and Chevron. The trade ban and economic sanctions against Russia
will also continue to impact the stock market. Taking a proactive approach to investing in other energy options is critical for other countries to avoid relying on Russian oil and gas.