Energetic chaos: when will we learn?

 Beatrice E. Rangel
Beatrice Rangel

All the nations of the world prostrate themselves before the scarcity and high prices of energy products and their derivatives. Because what Russia has unleashed by invading Ukraine is an energy supply crisis; a logistics crisis for energy products and a financial crisis.

Facing this multifaceted crisis requires suspending the regulations that normally weigh on the energy market to facilitate the flow of energy supply. It is also necessary to review the skein of controls that weigh on the world’s merchant marines and especially on tankers that transport oil and gas and, of course, transactions must be facilitated through financial harmonization.

All of this calls for a gigantic coordination effort between governments and private companies that exploit oil and gas, between these companies among themselves, and between all the players in the energy market and the world financial system.

So far, however, what we have seen is a mad rush to regulate oil activities that seems to have no end. Regulation of gas and oil exports in producing nations. Reservation of transport capacity for state oil and gas acquisitions everywhere and, as if that were not enough, rationing of consumer sales in some countries. These policies have made the price of Brent crude go from $97 to $140 from February to June of this year.

The question then arises what would have been the effective policy to confront this calamity unleashed by Russia. The answer is certainly not to Latin American taste. In crises, the markets are the best operator to achieve equilibrium. That is, if the laws of supply and demand operate, they will act as a rationalizing element of the market and will lead to equilibrium. This new balance is possibly less satisfactory for the whole world than the one that prevailed before the Russian aggression in Ukraine. But unless there is someone willing to unleash a nuclear war, the oil shortage will continue for a season or so. And it is time to take advantage of this painful contingency to further advance in the area of ​​green energies, which, as evidenced by the energy trajectories of Costa Rica and Uruguay, end up cushioning these crises derived from disruptions in the oil market. In short, it is time to allow the markets to rationalize the consumption of fossil fuels and the nations to take advantage of the moment to promote self-sustaining energies. That, incidentally, open new doors of financing and increase employment.

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