Tesla CEO Elon Musk has, in a surprise tweet, called for world governments to immediately increase oil and gas output following the fallout of the Russia-Ukraine crisis.
Considering the world’s dependence on Russian oil and gas exports, analysts have cautioned that a decline in oil and gas supply from Russia will have dire energy security ramifications across the globe, and which is currently manifesting in high energy prices.
Apparently, this seeming ‘fear’, had previously discouraged the US and the EU from placing sanctions on Russia’s oil and gas sector, and banks that provide financing to its oil and gas industry. But now, the U.S. has hinted, the decision to sanction Russia’s oil and gas sector “is on the table.”
“Hate to say it, but we need to increase oil & gas output immediately,” Musk said in a tweet on Saturday, March 5, 2022. “Extraordinary times demand extraordinary measures,” he added.
Russia’s oil and gas sector is the world’s third largest oil producer and the largest exporter. Its exports of about 5 million barrels a day of crude oil represent roughly 12 per cent of global trade– and its approximately 2.85 million barrels a day of petroleum products represent around 15 per cent of global refined product trade. Around 60 per cent of Russia’s oil exports go to Europe and another 20 per cent to China.
Sustainable Energy Solutions not Ready To Offset Declining Russia Oil Output
In a follow-up tweet, Musk admitted that while it would be bad for his electric car company, sustainable energy solutions aren’t immediately available to offset limited Russian oil and gas exports.
“Obviously, this would negatively affect Tesla, but sustainable energy solutions simply cannot react instantaneously to make up for Russian oil & gas exports.”Elon Musk, CEO, Tesla
Elon Musk is cited to have said in an interview last year that: “I’m not in favour of demonising the oil and gas industry. We’re gonna need to burn fossil fuels for a long time. The question is just at what rate do we move to a sustainable energy future?”
On Friday, March 4, 2022, IEA members confirmed their individual contributions to an initial response plan to release emergency oil stocks in order to reduce the impact of the Russia-Ukraine crisis.
“The commitments submitted by Members actually surpassed 60 million barrels, demonstrating great solidarity,” the IEA said, adding that this turn of events sends a unified and strong signal to global oil markets that there will be no supply shortfalls due to the Russia-Ukraine crisis.
IEA’s executive Director, Fatih Birol said: “The decision taken to release emergency stocks– for only the 4th time in the IEA’s history – has sent a strong message that IEA Members are unified in support of Ukraine and will do all they can to provide stability to the market during these difficult days.”
The US has committed to release 30 million barrels of oil, followed by Japan with 7 million barrels of oil, Korea with 4.4 million barrels of oil while the rest of the countries pledged below 4 million barrels. In total the 31 member countries of the IEA have pledged to contribute 61.7 million barrels of oil to offset the imminent supply shortage.
The coming weeks would be a true test for the global economy as Russia appears unrelenting of its attacks on Ukraine, as the war has gone on for over a week now.
In follow-up tweets, Musk expressed solidarity to the Ukrainian people and sympathized with Russians, who he said don’t want this.