The month of October, when the US stopped using its reserves, the price of oil will go up again, if it has not happened by then, even if there is a deal with Iran. The structural deficit remains – consumption continues to grow, but production cannot follow because there is not enough investment. This is what Boyan Rashev, managing partner at Denkstatt Bulgaria, said in the program “The World is Business” on Bloomberg TV Bulgaria with host Ivaylo Lakov.
The slump in commodity prices in the early to mid-summer was driven by fears of a recession, but those fears are far from over. There will be a recession, especially in Europe, but it will not lead to a drop in commodity prices. In reality, there will be stagflation – there will continue to be very high inflation and recession at the same time, which is the worst possible option.
In a recession, prices can rise based on a lack of supply. In the winter, everything will depend on how much Russia will use its energy weapon as a weapon. If Russia wanted to checkmate Europe in one fell swoop, it would have cut off 100% of Europe’s gas supply on February 24th.
Russia’s main income is oil – China, India, Bangladesh are happy to buy Russian oil, the other big income is coal. Russia also sells a lot of gas to China. Europe cannot force Russia to do or not do something through energy sanctions. You are the big importer and you are addicted.
“In terms of gas, Europe needs 3-4 years minimum to emancipate itself from Russia. In terms of oil, the market is global”.
On the topic of gas supplies to Bulgaria – the move to abandon American gas tankers and to declare that from now on negotiations with Gazprom are inevitable – the economist said that this move can only be appreciated if we know what the government is aiming for. “I don’t know what he wants to achieve. Whether the move is right or not depends on what the political consensus is in a country, and we don’t have one.”
“In theory we chose to be part of the European Union and in practice we are. That means we had to do everything we could to secure gas that was independent of Gazprom. Could we have done that? I guess yes. On the other hand, Russia is in such a situation at the moment – it is looking for a way to break the unity in Europe and would gladly “break” us first by supplying cheap gas to us first”.
“There is a political risk for Bulgaria – Putin’s game is to split Europe and it may turn out that we are on his side. I hope it will not happen because our choice is clear – we are part of the EU and we have to everything is possible for the European Union to be strong and united, regardless of the fact that there are people in power in Brussels who are not very adequate”.
Bulgaria makes a huge contribution to the energy stability of the Balkans, thanks to the electricity we export, because about 30-40% of the electricity produced in Bulgaria is exported. Our current maintains the stability of networks. If it wasn’t there, there would be a huge problem with electricity supplies, Rashev emphasized.
Coal-fired power plants in Europe are currently being opened en masse, but the question is where the coal will come from – there is also a ban on the import of Russian coal, local mines are closed, and reopening requires years and billions of investments.
The huge mistake in Europe’s energy policy has been that investment in exploration, production, transportation of oil, gas and coal has died in the last 10-15 years. The idea is that renewables will replace them, but it’s now more than obvious that they can’t. Europe is in an energetic disaster.
The European Community is the “European Steel and Coal Community”, and where this community was created, there are no more steel mills because they are closing down en masse due to high gas, oil and electricity prices. Europe has totally broken with what originally united it, and unfortunately this may lead to a breakup that no one wants, concluded Rashev.
“Abandoning the pursuit of green goals right now and resuming the use of coal and nuclear power plants is the way to solve the problem, but this path is long and not easy. It must be understood that, however it sounds strange that every lev (or euro) investment in renewable energy is a lev lost as an investment in other capacities that can actually solve the problem”.
There is no person who deals with energy to claim that we can quickly change everything technologically and go only on wind and solar, the interlocutor stated. “The interesting thing is that the worse it gets, the more vigorously politicians start to stamp their feet and say this is the solution, even though it clearly isn’t working.”
Why should Bulgaria not import gas from Russia, since Germany imports? Are people in Bulgaria protected against high electricity prices? What are the political risks in Bulgaria? How likely is a future in which the supply of current will be subject to regimes, and what is the relationship with the dream of mass use of electric cars?