Ever since the beginning of the industrial revolution, energy has becoming increasingly important for human civilisation, with countries that have readily accessible sources often enjoying significant advantages.

Britain enjoyed a significant advantage thanks to its ready access to coal, which provided a source of cheap energy for turning iron into steel that in turn filled the factories of that era.

During World War 2, Germany put a lot of effort into its attempt to capture Russia’s oil fields while the more cynical amongst us will say – with some evidence – that the US-led defence of Kuwait and subsequent invasion of Iraq was fuelled by a desire to secure crude oil supplies.

Fast forward to today and despite soaring oil and gas prices, Europe is finding it incredibly hard to sanction Russian oil and gas exports due to the region’s reliance on those sources of energy.

With renewables still having some ways to go before it can replace fossil fuels, the ‘war’ over energy is likely to heat up at least in the short-term and potentially beyond. Here’s a look at the various fossil fuels.

US, UK ban Russian oil

The US and the UK have announced bans on Russian oil imports with President Joe Biden warning that Americans would see a rise in petrol prices.

“We will not be part of subsidising Putin’s war,” he added.

Meanwhile, the UK will phase out imports of Russian oil and oil products by the end of 2022 with Prime Minister Boris Johnson saying that this would be give enough time for companies to adjust and ensure that consumers are protected.

The European Commission has also announced plans to slash the region’s dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel “well before 2030”, the ABC reported.

According to EIA data, the US currently imports about 600,000 barrels per day of Russian oil.

While this is certainly a substantial amount, its loss is hardly insurmountable given that the US has been gradually ramping up its own production of shale oil while the Canadian province of Alberta has flagged that it could also replace the crude volumes.

In a post to Twitter, its Energy Minister Sonya Savage said that with the world’s third largest oil reserves, Alberta is the answer to US energy security.

There are advantages and disadvantages to importing oil from Alberta.

While oil from Canada is certainly significant given that it doesn’t come from rogue government regimes, Alberta crude is produced from oil sands, which are not known for being environmentally friendly even in comparison with regular sources of crude.

However, with even Tesla boss Elon Musk advocating for increased oil and gas production, environmental concerns might be taking a back seat to further isolating Russia for its invasion of Russia.

Russia has rather predictably warned that a ban on its oil would be catastrophic for global markets with Deputy Prime Minister Alexander Novak projecting that it could push prices over US$300 per barrel.

The benchmark Brent crude is currently trading at US$125.46 per barrel after surging up to almost US$140/bbl.

European gas squeeze could get worse

Novak has also flagged that Russia could cut off natural gas supplies transported to Germany via the Nord Stream 1 pipeline.

Reuters quoted him as saying that while Russia was fulfilling its obligations in full, it would be entirely within its rights to retaliate against the European Union after Germany froze certification of the Nord Stream 2 gas pipeline last month.

“If you want to reject energy supplies from Russia, go ahead. We are ready for it. We know where we could redirect the volumes to,” he added.

While sanctions against Russia have already started to bite, there’s every reason to believe that ongoing oil and gas sales along with high prices would cushion the blow.

Bloomberg quoted Barclays and JPMorgan as saying that should Russia cut off gas supplies, the EU’s GDP could be slashed by as much as 1%, delaying the post-Covid recovery.

None of this has done any favours for the European gas price with benchmark Dutch gas futures soaring up to 64% to 335 euros per megawatt hour, or a staggering US$600/bbl of oil.

Coal given a lifeline… for now

The conflict and its impact on energy prices has also been hugely beneficial for coal with the spot price for shipments leaving the Port of Newcastle in New South Wales rising to a new record of US$418 per tonne.

Australian coal could benefit further should Europe move to ban Russian thermal coal imports, which make up 70% of the region’s supplies.

Wood Mackenzie coal analyst Rory Simington said that even if there was only a marginal extra demand for Australian, South African or Colombian coal, the tight market would support high prices for quite some time.

However, the long-term picture for coal remains negative as the supply shortage is due in no small part to a lack of investment as financial markets step away from the fossil fuel.

Fat Prophets resources analyst David Lennox added that high coal prices would significantly increase the costs of coal-fired power, which could hasten the transition to renewable energies.