Dangerous divisions. Energy is the foreign policy tool of choice these days for countries with energy resources (see yesterday's column). The possibility of regulating trade, investment and access to energy resources at global level through international trade rules like those of the World Trade Organisation, along with tribunals and measures to punish breaches of the rules, is a pipedream. International cooperation is, of course, essential and the European Union has to fully participate in this to protect its own interests, but in a realistic manner, with its feet firmly planted on the ground and acting as a compact unit when facing the rest of the world. These two aspects - internal cohesion and relations with the outside world - are not separated off from each other to a sufficient extent in the EU but are mixed and matched in a tangle of globalisation. The EU should be a single body with its own competition rules and internal measures covering investment, fighting pollution and developing clean energy. It is working on this first point. At the same time, this compact EU should have a common strategy vis-à-vis the outside world. It is miles away from this second point.
There are plentiful, substantial disagreements and divergences about how the internal market should work (unbundling of generation and distribution, for example), internal networks have not yet been finished (like connections between Spain and the rest of the EU) and a common line is not yet being taken on nuclear power, but work has started and progress is being made. When it comes to relations with the outside world, however, each member state or national entity is pursuing its own policy, sometimes in competition with neighbours. Philippe Maystadt recently commented at the Economics and Finance Council (ECOFIN) that 'the member states have not yet agreed a common policy in relation to external security of energy supply.' A few days before, on 1 February, Javier Solana called for the creation of a genuine energy foreign policy for the EU: 'There are things we can change tomorrow. It is up to use to avoid the kind of fragmented, bilateral negotiations which leave all of us worse off. A more united and comprehensive approach would enhance our bargaining position… Perhaps this cannot happen overnight. But it's important to get started. For instance, by ensuring a better flow of information on bilateral negotiations.'
Two forgotten areas. The huge energy and climate package unveiled by the European Commission covers the main aspects of future policies, and debate has already started at the Council and European Parliament. This package, through which the EU is taking the lead and setting the example in areas upon which the future of humanity and planet Earth will depend, should not make us forget other aspects, both internal and external. Official documents and public statements, including the views of the European Parliament and its political groups ignore various issues, which are crucial to my mind, concerning the interests of big oil companies and how oil prices are determined. I will look at this in more detail.
The conclusions of the G7 summit in Tokyo recently urged OPEC countries to increase oil production in order to boost supply and bring prices down (see our newsletter of the day before yesterday). At the same time, both Esso and Shell have announced record profits in 2007 due to high oil prices, although in fact they have both decreased oil production. It is clear that the interests of the global economy do not match the interests of big oil companies - in fact they clash. Secondly, the information available on how oil prices are set is truly staggering - there is no connection between costs and prices. Speculation and often artificially generated tensions are key. We cannot even say that the big oil producing countries and companies are responsible for this situation - they simply take note of price changes (which they themselves do not decide upon), which they naturally benefit from. Apart from a few sporadic comments here and there, nobody ever complains about this unacceptable set-up. Even the European Parliament, in the most determined and virulent arguments by its 'opposition' parties, seems to ignore this side of the artificial oil price formation and speculation (natural gas prices automatically follow suit).
Alongside these gaps (or errors), there are also positive aspects for Europe - in pride of place, scientific and technological progress in energy innovation.
Tomorrow I will conclude this rapid overview with some comments on this aspect.
(F.R.)