The Global Impact of High Oil Prices

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Today on State of the World, the global impact of high oil prices.

We're listening to State of the World from NPR.

We bring you the day's most vital international stories up close where they're happening.

I'm Greg Dixon.

Ever since the US and Israel launched a war on Iran, oil prices have been on a roller

coaster, but overall have been trending higher.

An increase in the price of oil has worldwide consequences, with winners and losers.

To get a snapshot of where things stand, we're going to hear from three reporters around

the world.

In Taiwan, in Germany, and we start in Russia, with NPR's Charles Mainz.

In Moscow, initial Kremlin outrage over the US's Rayleigh attacks on Iran, an assassination

of the country's supreme leader, has given way to political triangulation, says Vladislav

and Ezemsov, a Russian economist and government critic, now based in the US.

It was one of the very few cases when the death of your close ally was immediately transformed

into a source of some tangible gains.

The Kremlin has condemned US's Rayleigh actions as a violation of international law, but move

quickly to leverage the crisis, particularly when it comes to energy.

Meeting with top oil and gas officials in Moscow, Russian President Vladimir Putin instructed

them to use the new price reality in hydrocarbons to recoup losses from Western sanctions.

He said Putin offered a number of considerations to

the world's ending the conflict in a phone call with President Trump last week.

The US has since issued a temporary waiver on sanctions on some Russian oil exports

first to India and now to the rest of the world, a reversal in US policy that aides Russia's

war chest for Ukraine say critics, yet the windfall for government coffers has been welcomed

in Moscow, where the economic forecast and mood were otherwise grim, says the economist

in Ezemsov.

Yes, it can provide a kind of lifeline for the Russian finances, but what is even more

important, it changes the attitude of Russia and leads to what is going on.

On Friday, Kremlin spokesman Dmitry Peskov acknowledged US and Russian energy interests

were aligned for now, but weren't long-term global market stability, dependent on continued

access to Russian energy.

It's the latest sign that as the crisis in Iran deepens, Moscow is betting on future

sanctions relief from the US and Russia's return as an essential energy exporter.

I'm Rob Schmitz in Berlin, the capital of Europe's largest economy, an economy that

has had a roller coaster week.

Germany's largest employer, Otto Maker Volkzwagin, announced this week it plans to

cut 50,000 jobs inside the country because its profits have been cut in half in the past

year.

Also this week, the country's largest defense contractor, Ryan Mattal, announced its

sales are expected to grow by nearly half this year, and that it's selling off its

automotive parts division to focus on making more weapons.

Now neither of these announcements have anything to do with the rising cost of oil due to the

war in Iran, but they're both indicators that Europe's largest economy is in flux,

and spiking energy prices are complicating matters.

Germany's Federal Economy Minister, Katarina Reicha, warned the nation's gas stations

that the government would fight price gouging by only allowing them to raise the price of

gas once per day.

The price of gasoline in this car-loving nation has increased by more than 20 percent since

the war began, and Germans are now paying nearly $9 per gallon at the pump.

But Claudia Kempfer, economist at the German Institute for Economic Research, told National

Broadcaster ARD that the country's new price gouging law is missing the bigger point.

Rising prices at the pump are a wake-up call, said Kempfer, to about our excessive dependence

on fossil fuels.

But Germany is moving away from fossil fuels, largely spurred by the energy crisis following

Russia's invasion of Ukraine.

Over the past five years, the country's renewable energy share went up more than 10 percent.

More than 55 percent of Germany's electricity is now generated by renewables, a big help

in times like these when the global price of oil seems to keep rising.

I'm Ashish Valentine in Taipei.

Here in Asia, the undisputed leader in renewable energy is China.

More than half of all new vehicles sold there are EVs or hybrids, and less than 5 percent

of Chinese electricity is generated from oil and gas, although quite a bit more comes

from domestically sourced coal.

That sets it up reasonably well for the fuel shocks caused by the Iran War, says Don

Wong, an analyst at Eurasia Group which helps businesses determine political risk.

China's massive emesment in green technology over the past 20 years is paying off really

well.

So the Chinese economy doesn't depend on oil and gas in a similar level as the other

Asian economies.

Combined with months of fuel reserves, she says, that means the average Chinese consumer

hasn't yet noticed a hike at the gas pump.

More concerning for China is what to do if the war goes on for longer than a few months.

Its band refined fuel exports to help preserve local supply.

After the next few years, Wong says China plans to even further insulate its energy supply

from American policy decisions.

China has been developing new pipelines, investing heavily to connect with Russia and diversifying

the sources of oil and gas to Central Asia.

Here in Taiwan, which manufactures the vast majority of the world's high-tech logic chips,

the semiconductor industry is heavily reliant on power generated from liquefied natural

gas.

In normal times, a full third of Taiwan's LNG imports comes from Qatar.

But these aren't normal times.

Taiwan's economy minister, Kong Ming-Shi, told reporters the island has secured enough

gas shipments to meet demand through April.

But in the event the conflict lasts longer, Taiwan and other Asian nations are seeking

alternative suppliers such as the U.S. and Australia.

There was Ashish Valentine in Taipei.

We also heard from Rob Schmitz and Berlin and Charles Mainz in Moscow.

That's the state of the world from NPR.

Thanks for listening.

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