Generate QR code
Open Access
Subscription Access
Oil market: Conflict between recovery and energy transition
https://doi.org/10.32609/0042-8736-2022-9-5-33
Abstract
The article considers the place of oil in the energy balance of developed and developing countries during the shocks associated with the technological progress, business cycles, climate policy trends, the pandemic of 2020, and the sanctions of 2022. The results reveal the stability of the demand for motor fuel in the post-pandemic recovery as well as the improvement of the position of oil companies. The study examines the multidirectional impact of climate policies: reducing oil demand and discouraging investment in oil production. In addition, our research considers sanctions and a partial oil embargo as a kind of forced industrial policy leading to the reorganization of the world’s oil production, delivery, and consumption systems, as well as the uncertainty in investment and an increase in energy prices. The stability of the demand for motor fuel in the post-pandemic recovery and the improvement of the position of oil companies are shown. The duality of the influence of the climate policy is considered: the reduction of relative oil demand, as well as the deterrence of investment in oil production. For a mature industry that provides high returns to investors, this means a normal change in the investment function from expanding capacity to increasing payments and market capitalization. The goal-setting conflict between energy security and the preservation of the planet’s climate is deepening. The fundamental question: how much government policy can change the natural processes of transformation, how quickly and at what cost, remains unresolved. Energy is proving to be one of the key touchstones for the ability of the world’s elites to coordinate on issues of sustainable development of the world economy and the preservation of the planet’s climate.
About the Authors
L. M. Grigoryev
HSE University
Russian Federation
Russian Federation
Leonid M. Grigoryev
Moscow
E. A. Kheifets
HSE University; Center for Strategic Research
Russian Federation
Russian Federation
Ekaterina A. Kheifets
Moscow
References
1. Analytical Center for the Government of the Russian Federation (2022). Fuel and energy complex of Russia in the conditions of sanctions restrictions. Energy Trends, No. 106. Moscow. (In Russian).
2. Bank of Russia (2022). Energy exports of the Russian Federation. (In Russian). https://www.cbr.ru/statistics/macro_itm/svs/export_energy/
3. Grigoryev L. M., Elkina Z. S., Mednikova P. A., Serova D. A., Starodubtseva M. F., Filippova E. S. (2021). The perfect storm of personal consumption. Voprosy Ekonomiki, No. 10, pp. 27—50. (In Russian). https://doi.org/10.32609/0042-8736-2021-10-27-50
4. Grigoryev L. M., Kurdin A. A. (2015). World oil market disbalance: Technologies, economy, and politics. Energy Policy, No. 24, pp. 24—33. (In Russian).
5. Makarov A. A., Grigoryev L. M., Mitrova T. A. (eds.) (2015). The evolution of global energy markets and its consequences for Russia. Moscow: INEI RAS; Analytical Center for the Government of the Russian Federation. (In Russian).
6. Makarov A. A., Mitrova T. A., Kulagin V. A. (eds.) (2019). World and Russian energy development forecast 2019. Moscow: INEI RAS; Moscow School of Management Skolkovo. (In Russian).
7. Medzhidova D. D. (2022). Changing the role of natural gas due to the energy transition. Problems of Economics and Management of the Oil and Gas Complex, No. 207, pp. 5—17. (In Russian). https://doi.org/10.33285/1999-6942-2022-3(207)-5-17
8. Rosstat (2022). Oil produced (including gas condensate) since the beginning of the year. Moscow. (In Russian). https://www.fedstat.ru/indicator/61403
9. Aizhu C., Xu M. (2022). China imports 13% less crude oil from Saudi in March, 14% less from Russia. Reuters, April 20. https://www.reuters.com/world/china/chinaimports-13-less-crude-oil-saudi-march-14-less-russia-customs-2022-04-20/
10. Bernanke B. S. (1983). Irreversibility, uncertainty, and cyclical investment. Quarterly Journal of Economics, Vol. 98, pp. 85—106. https://doi.org/10.2307/1885568
11. BP (2022). BP statistical review of world energy 2022.
12. Considine J., Aldayel A. (2020). Balancing world oil markets and understanding contango and inventories: The changing nature of world oil markets. KAPSARC Discussion Paper, No. KS--2020-DP15. https://doi.org/10.30573/KS--2020-DP15
13. EIA (2022a). Petroleum and other liquids consumption. https://www.eia.gov/international/data/world/petroleum-and-other-liquids/annual-refined-petroleumproducts-consumption
14. EIA (2022b). Primary energy consumption. https://www.eia.gov/international/data/world/total-energy/total-energy-consumption
15. Energy Policy Tracker (2020). Public money commitments to fossil fuels, clean and other energy in G20 countries recovery packages since January 2020. International Institute for Sustainable Development. https://www.energypolicytracker.org
16. Fattouh B. (2007). The drivers of oil prices: The usefulness and limitations of nonstructural models, supply-demand frameworks, and informal approaches. EIB Papers, No. 12.
17. Grigoryev L., Medzhidova D. (2020). Global energy trilemma. Russian Journal of Economics, Vol. 6, pp. 437—462. https://doi.org/10.32609/j.ruje.6.58683
18. Hamilton J. D. (2009). Understanding crude oil prices. The Energy Journal, Vol. 30, No. 2, pp. 179—206. https://doi.org/10.5547/ISSN0195-6574-EJ-Vol30-No2-9
19. Hamilton J. D. (2013). Historical oil shocks. NBER Working Paper Series, No. 16790. https://doi.org/10.3386/w16790
20. IEA (2020). Global annual change in real gross domestic product (GDP), 1900—2020. International Energy Agency, May 4. https://www.iea.org/data-and-statistics/charts/global-annual-change-in-real-gross-domestic-product-gdp-1900-2020
21. IMF (2022). World economic outlook: War sets back the global recovery. Washington, DC: International Monetary Fund.
22. IPCC (2021). Climate change 2021: The physical science basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press.
23. Kilian L. (2008). Exogenous oil supply shocks: How big are they and how much do they matter for the U.S. economy? Review of Economics and Statistics, Vol. 90, No. 2, pp. 216—240. https://doi.org/10.1162/rest.90.2.216
24. Kilian L. (2009). Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market. American Economic Review, Vol. 99, No. 3, pp. 1053—1069. https://doi.org/10.1257/aer.99.3.1053
25. Kilian L., Murphy D. (2014). The role of inventories and speculative trading in the global market for crude oil. Journal of Applied Econometrics, Vol. 29, No. 3, pp. 454—478. https://doi.org/10.1002/jae.2322
26. Mitchell J. V., Morita K., Selley N., Stern J. (2001). The new economy of oil: Impacts on business, geopolitics and society. London: Earthscan.
27. Mitchell J. V. (2002). A new political economy of oil. The Quarterly Review of Economics and Finance, Vol. 42, No. 2, pp. 251—272. https://doi.org/10.1016/S1062-9769(02)00130-8
28. OPEC (2021). World oil outlook 2021. Vienna.
29. OPEC (2022). Monthly oil market report. Vienna.
30. Pindyck R. S. (1991). Irreversibility, uncertainty and investment. Journal of Economic Literature, Vol. 29, No. 3, pp. 1110—1148.
31. Rystad Energy (2022). Oil & gas investments and key capital allocation strategies in the E&P sector. Upstream report, May.
32. Taghizadeh-Hesary F., Yoshino N., Rasoulinezhad E., Chang Y. (2019). Trade linkages and transmission of oil price fluctuations. Energy Policy, Vol. 133, article 110872. https://doi.org/10.1016/j.enpol.2019.07.008
33. Tsirimokos C. (2011). Price and income elasticities of crude oil demand: The case of ten IEA countries. Swedish University of Agricultural Sciences, Master Thesis, No. 705. World Bank (2022). World Bank commodities price data (The Pink sheet). World Bank. Washington, DC.
34. Yergin D. (1992). The prize: The epic quest for oil, money, and power. New York: Simon and Schuster.
Review
For citations:
Grigoryev L.M., Kheifets E.A. Oil market: Conflict between recovery and energy transition. Voprosy Ekonomiki. 2022;(9):5-33. (In Russ.) https://doi.org/10.32609/0042-8736-2022-9-5-33
Views:
959
Email this article 
