Politics across the globe affect businesses and industries of all shapes and sizes, but the energy industry in particular is closely tied to issues happening around the world. Policy changes and lawmakers are capable of drastically changing the landscape of the energy industry in one fell swoop. Furthermore, nations including Russia and China have used the power they hold over energy, a necessary commodity in the modern world, to threaten the livelihood of consumers in need of their energy resources. Here are a couple of examples of how world politics have greatly influenced energy business in only the past couple of months.
France’s announcement to ban all licensing for oil and gas exploration within their territories earlier this year makes valuable oil and gas assets located there null and void. The country’s drive towards renewable energy, bookmarked by the world renowned Paris Climate Agreement, will result in more of these resources being cut off from exploration and production efforts in the near future worldwide. France has also detailed their plans to end the sale of all petrol and diesel fuel based vehicles within the country by 2040, limiting consumption of carbon based energy as well.
Disputes between the many countries surrounding the South China Sea, which include Taiwan, Brunei, Malaysia, Vietnam, and of course China, have prevented oil and gas exploration in the resource rich area for a long time now. The area is so hotly contested as a result of over $5 trillion worth of ship-borne trade traveling through the sea annually. Whoever can claim control over the region stands to gain one of the most profitable trading routes in the world. The Philippines released information today about their plans to pursue an oil and gas exploration and production asset in the region along with Canadian and Chinese partnered companies. They hope to find a solution that benefits all countries operating in the area by opening it up to the energy industry.
The desire for regional independence from Iraqi Kurds has made waves in the energy industry, displaying that the energy industry is susceptible to primarily citizen driven political movements as well. Turkey’s response to Iraqi Kurds 9 to 1 vote for secession was to immediately threaten crippling restrictions on oil trading for the area, a move that could produce repercussions in the energy industry globally.
These are just a few instances of how world politics and the energy industry are tied so closely together. While news of the Paris Climate accord has wavered over the past few months, the effects of this agreement will continue to be felt throughout the energy sector for decades to come. Along with, unfortunately, whatever other political issues happen to develop.
Written by: Chris Stomberg