This is an excerpt of a post by Heikki Willstedt, director of energy policy, AEE. To read the full post (in Spanish) click here.
Oil has reached €90 a barrel and, when the embargo on Iran becomes effective, there are analysts who predict it will rise to €100 a barrel. Energy imports cost more in Spain than they do in emerging countries, so we cannot improve either our competitiveness or our trade balance deficit. In Spain there are no indigenous oil resources, but we do have the wind to generate electricity. A Spanish wind turbine of 2 MW generates the energy equivalent to 7,000 barrels a year. Wind is the Spanish oil.
The International Monetary Fund defines an oil shock as a 26% or more increase in the price of oil. We have had three: 2008, 2010 and 2011. The current price of oil price in Euros is at a historic high. Just remember that in July 2008 a barrel of oil reached €84 a barrel. We are now 7% above the previous peak price.
Both the Dollar and the Euro have been devalued compared to emerging countries since 2007, but the Euro has lost more value than the Dollar since 2008. That means that energy imports cost us more than they do emerging countries, affecting our competitiveness and trade balance deficit.
When the economy was better in 2000 we were spending €20,000 million on imported energy (coal, gas and oil). Last year the bill amounted to €50,000 mn even though we imported 0.5% less energy than in 2000.
Clearly, Spanish wind energy is cheaper than imported energy where high-cost oil cancels out the lower cost of natural gas and coal.
In Spain there is no oil but there are indigenous resources to generate electricity. If we had an economy with 22% imported liquid fossil fuels and 53% electricity – with more than 70% powered by indigenous resources (currently Spain imports 53% fossil fuels), the Spanish economy would be better protected against increases in fossil fuel prices.
Today, energy dependence is strangling drowning the Spanish economy. In 2000, when a barrel of oil cost €20, the economy grew by 5%. However last year, (after the oil shock of 2008 and the economic crisis of 2009), oil cost €80 a barrel and Spain went into recession.
As a result Spanish energy demand has fallen by 7% from the 2007 peak, 3 million jobs have been lost, and if you count the economic recession of 2012 the economy will have shrunk by 5% compared to 2008.
This explains why the motorways are empty, the airports do not have aeroplanes, airlines are going bankrupt, and so on. The priority should be to reduce energy imports from abroad, promote energy conservation, an urgent and massive electrification of society, and to promote indigenous energy resources in the most cost effective way.