As the world keeps a watchful eye on the latest developments in the Russia-Ukraine crisis, Louisiana is paying close attention to the oil and gas markets, which have been incredibly volatile as tensions have escalated. Any invasion by Russia into Ukraine would have an immediate impact on the state says Eric Smith, associate director of the Tulane Energy Institute.
“I think the first thing you would see is a spike in both oil and gas prices, in our case that would be ONG prices, mostly because of the inability to completely replace the gas lost to Europe,” Smith said.
European markets rely heavily on Russian oil, and if there is an armed conflict, it would certainly disrupt those supplies at a time when demand continues to increase. China and Asia could be hurt as well. Smith said that Louisiana doesn’t export large amounts of oil, but price spikes would hurt access to needed materials like heavy solid crude.
“Those imported, specifically the heavy solid crudes that we need, would be affected as well. Shipping would be disrupted, it would not be a pretty picture,” Smith said.
With the U-S already at its limit for oil exports, government officials have been trying to find ways to help meet the increased demand, should it be needed. But Smith says that will be a difficult proposition with few allies ready to step up.
“You’ve seen President Biden running around the world talking to the Japanese and saying would you be willing to divert some of the supplies that we were planning to send to you to Europe in an emergency,” Smith said.
A possible benefit for oil and gas producers is the potential for increased production. In January, more natural gas was shipped to Europe than the amount provided through Russian pipelines, a first for the U-S.
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