A driver leaves the yard after filling up his gas tanker truck at Marathon Oil in Salt Lake City, Utah, on May 20, 2021. (George Frey/Getty Images)
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CEOs during a recent panel discussion warned that an energy crisis during the 2023–24 winter months could be even more challenging than the coming “difficult winter.”
“We’ve got a difficult winter ahead, and subsequent to that we’ve got a more difficult winter in the year ahead of that, because the production that is available to Europe in the first half of 2023 is considerably less than the production we had available to us in the first half of 2022,” Russell Hardy, CEO of oil trader Vitol, told reporters on Monday at a panel discussion in the United Arab Emirates.
Hardy added that there will be “consequences of [an] energy shortage and therefore price escalation” and warned about a rise in the “cost of living.”
While speaking at the same panel, BP CEO Bernard Looney agreed with that assessment and said energy prices “are approaching unaffordability” and said some people are spending significant amounts on energy.
“I think [an energy shortage] has been addressed for this winter,” Looney said. “It’s the next winter I think many of us worry, in Europe, could be even more challenging.”
Energy price surges will likely lead to unrest across the world and possibly even in the United States, it has been warned. Protests have already started this fall in Germany, Austria, and the Czech Republic over the higher cost of energy, while some have called on their respective governments to end restrictions on Russian natural gas and oil amid the war in Ukraine.
“We’ve seen that any shocks to the price at the pump, or something as simple as LPG [liquefied petroleum gas] for cooking, can cause unrest,” Petronas CEO Datuk Tengku Muhammad Taufik told the panel, according to CNBC.
Soon, there will be “a real risk that governments without a steady hand on policy shaping” will have to deal with “unrest,” he said.
Responding to claims that oil and energy companies are making record profits in recent months, Looney said it’s due to simple economics and an issue of market supply and demand. This week, President Joe Biden said he would target U.S. oil companies with a windfall tax and accused them of war profiteering, although his public statements were criticized by even some Obama-era officials.
Economist and former Treasury Secretary Larry Summers wrote on Twitter Tuesday that a policy supporting windfall taxes on oil companies will likely backfire on Biden.
“I’m not sure [I] understand the argument for a windfall profits tax on energy companies,” Summers wrote. “If you reduce profitability, you will discourage investment which is the opposite of our objective.”
