Energy Security in Peril

In an effort to post more often, I will now change my posting style to shorter, punchier posts. I start the new year with a look at the Russia-Ukraine gas supply spat, which has gained a lot of press coverage and analysis.

Most of the western press have characterized Russia'’s "compromise"” to restore gas supplies after two days as a defeat to Russia and an embarrassment to its new G8 presidency. However, an Asia Times article ("The Kremlin and the World Energy War", Jan. 9, 2006) convincingly argues that Russia mostly got the upper hand. I highly recommend this article for an in depth analysis of Russia’s motivations.

The Economist ("Nervous Energy", Jan. 7, 2006) misses the point. In interpreting the end-result as a Russian defeat, the venerable British newspaper argues that the moral of the Russia-Ukraine incident is that energy suppliers need its consumers as much as consumers rely on their suppliers. On the contrary, it has reaffirmed the potency of the energy weapon and more dangerously, undermined the U.S.' regime change drive in the former Baltic states. The ironic result of the U.S. driven Colored Revolutions in Eastern Europe is that it has instigated Russian backlash and exacerbated America’s energy security problem.

Natural gas has often been touted as the bridge of our oil-based economy to the hydrogen economy. But as Paul Roberts points out in his book, The End of Oil, the natural gas economy faces the same geopolitical risks as oil. Just as Oilsville has to contend with politically unstable OPEC, Natural Gasville has Russia and Iran to tout as its top two producers, not exactly the most democratic or Western-friendly of states.

U.S. foreign policy is not helping one bit.