France’s Socialist Party (PS) newly-elected President Francois Hollande (R) reacts on stage, flanked by (from L, 1st row) socialist Arnaud Montebourg, socialist President of the Poitou-Charentes region Segolene Royal, Hollande’s campaign political advisor Jean-Michel Baylet, Hollande’s campaign manager Pierre Moscovici, Hollande’s campaign political advisor Harlem Desir, Hollande’s campaign chief of staff Faouzi Lamdaoui, Hollande’s campaign political advisor Martine Aubry and Hollande’s companion Valerie Trierweiler, at the Place de la Bastille in Paris on May 7, 2012, after the announcement of the first official results of the French presidential second round. Hollande had won with 51.62 percent of the vote to 48.38 percent for Sarkozy on May 6, 2012, becoming France’s first Socialist president since Francois Mitterrand left office in 1995. AFP PHOTO / FRANCK FIFE
The last 48 hours shifted the political landscape across Europe, and with it, the debate over energy policy.
France now has a new president in Socialist Francois Hollande who wants to substantially shrink his country’s iconic nuclear power infrastructure. Russia has an old and familiar face in Vladimir Putin returning to the presidency with a hunger for aggressive oil exploration in the Arctic and elsewhere. And France, Greece and Germany all voted for politicians who want to ease spending austerity.
The instant consequences of this weekend’s changes in political power occurred in the markets, where oil plummeted below $98 a barrel Monday morning amid investors’ fears that Europe’s austerity measures could be undone by a new round of spending and debt.
But the long-term shifts in energy policy could be even more consequential.
Hollande won Sunday’s runoff and ousted conservative President Nicolas Sarkozy, in part on a pledge to reverse Sarkozy’s push to expand nuclear energy.
France currently gets about three-quarters of its electricity from nuclear reactors, and Hollande has vowed to reduce that to closer to 50 percent over the next decade or so.
That means many older reactors in the country may not have their lifespan expanded from 40 to 60 years as Sarkozy had planned. And it means France will have a new hunger for other power sources such as natural gas, solar and wind, entering an already crowded market competing for energy sources across the globe.
In Russia, Putin’s return Monday for a third term as president means a continued press toward Arctic oil development, as evidenced by an exploration deal announced over the weekend between Norway’s Statoil and Russia’s Rosneft. The question remains whether Russia’s aggressive pursuit will spur other countries to explore oil deposits once deemed off limits.
But the biggest question emanating from the weekend’s dramatic political shift may involve the future of Europe’s economy. In Greece, France and Germany, voters all elected politicians who want to ease the current austerity measures that the European Union fought so dramatically for.
With Germany’s Angela Merkel weakened by the elections results and Sarkozy and Greek Prime Minister Lucas Papademos ousted, the EU has lost some of its strongest voices for austerity. The question now is whether a new round of spending in those countries will spur economic development or increased debt that leads to disaster.
Until that picture is clearer, expect global traders to be wary. And that could keep oil prices lower in the short-term.