Energy

The International Energy Agency predicted last month that demand for global oil for transport will peak around 2026, plateau for all uses by 2028, and possibly hit a zenith by the end of the decade. Harvard experts say the forecasts track with what’s going on in the developed world, but the energy needs of less-wealthy nations pressing to develop their economies could foil expectations for years to come.

To keep oil flowing and diminish the U.S., Beijing brokers a deal between Iran and Saudi Arabia.

The price cap on Russian oil implemented today by the G7 countries plus Australia represents a novel approach to sanctions. The policy is designed to reduce Russian fossil fuel revenues while keeping Russian oil on the market. In this brief, Catherine Wolfram, Simon Johnson, and Łukasz Rachel explain the basic economic principles at work and discuss some of the critiques of the price cap. 

The price cap on Russian oil implemented today by the G7 countries plus Australia represents a novel approach to sanctions, according to a policy brief authored by Catherine Wolfram, Simon Johnson, and Łukasz Rachel and released today by Harvard Kennedy School’s Belfer Center for Science and International Affairs and the Mossavar-Rahmani Center for Business and Government. 

In late 2017, Mexico made headlines as Italian company Enel bid what was then a world-record low price for renewable energy in the country’s third such energy auction. This development was possible due to the historical and sweeping energy reforms passed with broad support in Mexico in 2013. Then-President Enrique Peña Nieto had succeeded where previous Mexican presidents had failed, reversing decades of resource nationalism and overhauling the energy sector through constitutional reforms that gave the private sector a larger role and advantaged renewable energy in Mexico’s economy. The 2017 auction seemed to indicate Mexico’s bright future not only as a conventional oil producer, but also as a clean energy power.

Russian military action in Ukraine could trigger an energy crisis even more serious than the one already hitting Europe. As has been pointed out, should the West hit Russia with severe new sanctions, President Vladimir Putin could cut off natural gas exports, leaving the continent shivering through midwinter. Yet there is another potential weapon of Russia’s that’s been less discussed and might be very effective: An ability to disrupt global oil markets, which would directly hit U.S. consumers.

Whether they regard it as competitive, cooperative, or confrontational, virtually all observers agree that the U.S.-China relationship is consequential. From cyber norms and AI to military tensions in the Taiwan Strait and the global struggle to turn the tide on climate change, how Washington and Beijing manage their shared future will shape the globe for decades to come. Through research and relationship-building, the Center is dedicated to helping the U.S. and China collaborate and compete without conflict.

This paper explores the effect of oil shocks on electoral outcomes. Using a new polling and election data set for 207 elections across 50 democracies, the paper shows that oil price increases systematically lower the odds of reelection for incumbents. The analysis verifies that these shocks—which reduce consumption growth—are associated with worsening performance for incumbents in the runup to reelection and a reversal in the leaning of the political party in power post-election.  

The geopolitical and geo-economic forces wrought by the coronavirus pandemic, as examined previously in this series, are likely to slow the transition to a more sustainable global energy mix. Fortunately, the pandemic has also resulted in governments gaining vastly greater influence over whether this shift stalls or accelerates.

For most people, there was nothing to celebrate when the International Monetary Fund downgraded its outlook for global economic growth in June, anticipating a contraction of 4.9% for 2020. Yet for others, such as the small but persistent group of economists and others known as the “degrowth movement,” the Covid-induced economic slowdown has a silver lining.