Archive for the ‘Energy’ Category

Europe’s alternative to Putin’s oil and gas

October 20, 2014

gasSupplyAndDemand

Map: Global Research

Dependence of key European nations on imports of Russian oil and gas puts the European Union in weak position in relation to Vladimir Putin.

One way to get out of that position of weakness is to end the sanctions against Iran, and import Iranian oil and gas.  In the longer run, Europe would benefit from a new gas pipeline from Iran to Europe.

The European Union has no conflict of interests with Iran.  It is following the lead of the United States.  As far as that goes, the United States has no conflict of interests with Iran.  We Americans are merely nursing old resentments and following the lead of Israel and Saudi Arabia.

§§§

Breaking Europe’s Putin addiction by Amir Handjani for Al Jazeera.

How much shale oil and gas is there, really?

October 13, 2014

Click to enlarge.

Source: Bloomberg News.

Shale drillers are a lot more optimistic about potential oil and gas when they talk to shareholders than when they report to the U.S. Securities and Exchange Commission.  Why?

Hint:  The SEC can prosecute for false statements.  Shareholders have to sue.

 

Going to war for oil doesn’t make any sense

October 9, 2014

infographic.ime.oil.gas

One of the justifications for going to war in the Middle East is to make sure we Americans have access to oil.

During the run-up to the 1991 Gulf War, Secretary of State James Baker said the issue was “jobs, jobs, jobs.”  He didn’t explain, but what I and other Americans took him to mean that if Saddam Hussein cut us off from the oil of Kuwait, our industrial machine would falter.

But there was no danger of that happening.  Saddam Hussein was perfectly happy to sell Iraq’s oil, and would have been perfectly happy to sell Kuwait’s oil.

oilcorridorThe oil-producing nations have just as much need to sell their oil as the oil-consuming nations have to buy it.

U.S. interventions in the Middle East have reduced American access to oil, not secured it.  The sanctions against Iraq in the 1990s, the continuing sanctions against Iran and the new sanctions against Russia have been intended to prevent these nations from selling their oil and natural gas.  The invasion of Iraq destroyed much of that nation’s oil-producing capability, which is only now recovering.

All this made oil and gas prices higher, not lower.

The only time U.S. access to Middle East oil was cut off was during the OPEC oil embargo of 1973.  But the embargo was broken without military action.  It was broken by the international oil companies who sold the oil to whoever wanted to buy it.  [1]

Since then there has never been another threat to U.S. oil imports.  The most strongly anti-American leaders, Libya’s Qaddafi and Venezuela’s Hugo Chavez, never refused to do business with the United States.  Politics was one thing; business, another.

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China, the USA and the world’s oil and gas

July 30, 2014
us energy independence jones map

China’s oil imports. Click to enlarge.

The other day I read that China has overtaken the USA as the world’s largest oil importer.  Earlier I read that China has overtaken the USA as the world’s largest market for automobiles.  As the world uses up easy-to-get oil, there will be conflict between the USA and China to get what’s left.

Notice this is just OPEC oil, not total oil importsChina needs access to the world’s oil and gas if it is to raise the material standard of living of its people.  But the USA needs access to the world’s oil and gas if it is to maintain what we call the American standard of living.

What this means is that, unlike with the situation between the USA and Russia, there is a real conflict of interest between the Chinese people and the American people.  The world may not have enough fossil fuels to satisfy the desires of both.

China has one of the world’s largest reserves of coal and one of the world’s largest coal industries.  It is a leader in developing solar energy technology, although this as yet serves only a tiny fraction of its energy needs.  China has extended pipelines into central Asia, and recently signed an agreement to build a new oil and gas pipeline into Russia.

0912ChinaSeaTerritory2The quest for energy explains China’s disputes with Japan, the Philippines, Vietnam, Malaysia and other countries over control of islands in the East China Sea and South China Sea.  Control of these islands not only gives China control over offshore oil and gas.  It enables China to protect its shipping from the Persian Gulf.

Access to oil is a vital interest of the USA.  The Carter Doctrine, back in 1980, said that access to the Persian Gulf was a vital interest of the United States, meaning the U.S. would go to war if necessary to protect it.  The first President Bush said in 1991 was the Gulf War was about “jobs, jobs, jobs,” which meant “oil, oil, oil.”

In recent years, the United States has increased domestic energy production, with fracking and offshore oil drilling (both of which President Obama strongly supports).   But this doesn’t mean the USA doesn’t need imports.  Seeming inconsistencies in current U.S. policy in the Middle East make sense if you think of U.S. policy as a quest for oil rather than a quest for democracy.

The world’s easy-to-get oil and gas have been used up and competition for the rest of the world’s oil is bound to become more intense.  The European Union, in its need for oil and gas, may find itself in conflict with both the USA and China.

I don’t see any obvious way to resolve this.  It would be good if the world’s energy-importing countries could reach an agreement based on compromise.  It would be good if the world could switch to renewable energy.  But I don’t see either one happening anytime soon, and to the extent that either compromise or renewables are feasible, it might entail a more frugal way of life than most North Americans (myself included) would be willing to accept.

LINK

 Whose Oil Will Quench China’s Thirst? by Chris Dalby for Oil Price and Naked Capitalism.

The interdependence of Russia and Europe

July 28, 2014

Europe Russia oil gas pipelines map chart

More Signs of Doubt in Europe About the Costs of Siding With Ukraine by Yves Smith for Naked Capitalism.

The Beginning of an End of the Trans-Atlantic Alliance by Mark from Ireland for Ian Welsh.

Hat tip for the map to Vox.

Why China and Russia draw closer together

May 29, 2014
One possible pipeline route

A possible gas route

If a problem cannot be solved, it may not be a problem, but a fact.
    ==Donald Rumsfeld

In April President Obama visited nations on the rim of eastern Asia to reassure them of U.S. support against China, whose government has aggressively laid claim to islands in the East China Sea that these nations regard as their territory.

China’s response has been to strengthen its ties with its inland neighbors, especially Russia and Russia’s client states in central Asia.   Last week China announced a $400 billion deal to buy natural gas from Russia.

At the same time President Xi Jinping called for greater military co-operation among China, Russia and Iran.

Another possible route

Another possible route

Guests at the Russian-Chinese conference included Presidents Hassan Rouhani of Iran, Nasr al-Maliki of Iraq and Hamid Karzai of Afghanistan.  Ironically, their presence together was made possible by the U.S.-backed regime change in Iraq and Afghanistan.  If Saddam Hussein were still in power in Iraq, he would not be found in the same room with a leader of Iran.  And the Taliban in Afghanistan, before the invasion, were much more anti-Russian than anti-USA.

Pepe Escobar, who has long reported on these developments for Asia Times, says that the most important event of the 21st century will be the economic integration of the Eurasian continent.

Many things could go wrong with this.  Just because something is announced doesn’t necessarily mean that it will happen.  But I don’t have any specific reason for doubting this will come true.

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China, Russia and the future of Eurasia

May 19, 2014

centralasian_pipelines

When the Bolshevik Revolution occurred, European and American Marxists were surprised.  Marxist theory said Communism would come first to the most economically advanced countries.

But Bertrand Russell, in The Practice and Theory of Bolshevism, wrote that Russia was the only country in which a Communist revolution could have taken place, aside from the USA.  A Communist revolution in Germany, France, Britain or some other country would be soon been destroyed by invasion or economic blockade of the capitalist countries.

The same was true of China, another country where a Communist revolution was not supposed to occur, but which has become, or is well on its way to become, the world’s leading economic power.  Russia and China are members of the BRICS bloc, a loose association which also includes Brazil, India and South Africa.  These rising nations see themselves as an alternative to the old G-7 group, consisting of  the USA, Canada, Britain, France, German, Italy and Japan.

Pepe Escobar, a roving foreign correspondent for Asia Times, interprets U.S. foreign policy as a doomed attempt to prevent Russia and China from dominating the heart of Eurasia, which he calls “Pipelineistan”.

While the USA has sacrificed its industrial base to financialization and militarization, China and Russia have been building up their energy infrastructure in the part of the world that is least vulnerable to American air and sea power or to blockade.  China is working on roads, railroads, pipelines and fiber optic networks that will reach across central Asia and Russia all the way to Europe, and negate U.S. control of the sea lanes.

Escobar wrote:

Embedded in the mad dash toward Cold War 2.0 are some ludicrous facts-on-the-ground: the US government, with $17.5 trillion in national debt and counting, is contemplating a financial showdown with Russia, the largest global energy producer and a major nuclear power, just as it’s also promoting an economically unsustainable military encirclement of its largest creditor, China.

Russia runs a sizeable trade surplus. Humongous Chinese banks will have no trouble helping Russian banks out if Western funds dry up.  In terms of inter-BRICS cooperation, few projects beat a $30 billion oil pipeline in the planning stages that will stretch from Russia to India via Northwest China.

Chinese companies are already eagerly discussing the possibility of taking part in the creation of a transport corridor from Russia into Crimea, as well as an airport, shipyard, and liquid natural gas terminal there.   And there’s another “thermonuclear” gambit in the making: the birth of a natural gas equivalent to the Organization of the Petroleum Exporting Countries that would include Russia, Iran, and reportedly disgruntled US ally Qatar.

The (unstated) BRICS long-term plan involves the creation of an alternative economic system featuring a basket of gold-backed currencies that would bypass the present America-centric global financial system.

via TomDispatch.  (Hat tip to Bill Harvey for the link)

Unless either China or Russia changes course, the future of Russia is to be an energy and raw materials hinterland to China, the world’s leading industrial power.  It should be needless to say that this is not a development I welcome.  I would not wish anyone I care about to live under China’s or Russia’s authoritarian governments.

What should the United States do about this?  We should be building up our own country’s industrial strength rather than trying to prevent the rise of other nations.

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What Russia gained by its Crimea takeover

May 18, 2014

tzz3

0518-web-blacksea-artboard_1-0Russia’s annexation of Crimea gives it a dominant position in claiming the oil and gas reserves of the Black Sea.  Crimea’s oil and gas assets, shown in the map above. now belong largely to Russia.

The maps at the right show Ukraine’s and Russia’s claims in the Black Sea before and after annexation.  The red area in the lower map at right shows what Russia gained by taking over Crimea.  Click on the link below for details.

In Taking Crimea, Putin Gains a Sea of Fuel Reserves by William J. Broad for the New York Times.

Speaking of Ukraine and Russia, here are links to three articles on the background of the Ukraine crisis that I found to be highly illuminating, and perhaps you will, too.

The Errand-Boys of Europe by Padraig Murphy for The Dublin Review of Books.   A look at the historical roots of Putin’s “Eurasianism,” a political ideology that says Russia should keep apart from Europe and its false philosophies of democracy and individual freedom, but instead be a bridge between Europe and Asia based on a philosophy of authoritarianism.

Fascism Returns to Ukraine by Timothy Snyder for The New Republic.  A well-known historian makes the case that Ukraine is a democratic nation, and that fascism is on the rise, not in Ukraine, but in Vladimir Putin’s Russia.   I think this article contains information and insight that is both true and important, but it is only part of the truth.

The New Cold War’s Ukraine Gambit by Michael Hudson for Naked Capitalism.  This is the other part of the truth: How Ukraine was destabilized by U.S. financiers and militarists and their European allies.

Sustainability, ZPG and Piketty’s equation

May 1, 2014

If environmentalists achieve their dream of a sustainable, steady state economy and zero population growth, and if nothing else changes, then wealth will become more and more concentrated in a tiny wealthy elite.

populationgrowthoriginal

Source: Piketty, Capital in the 21st Century

That’s a logical conclusion from Thomas Piketty’s formula of r > g in his book, Capital in the Twenty-First Century.  His simple but powerful idea is that if the rate of return on investment is a higher percentage than the rate of economic growth, then an ever-higher percentage of income will go to investors and a ever-less percentage to workers.  At some point this wold level off, but it could be at high levels of inequality, just as in the past.

Now what is economic growth?  It is the product of the increase in output per person and the increase in the population.  Birth rates are falling in many parts of the world, including North America, Europe and China, and the rate of economic growth can be expected to fall to the extent that high growth in the past has been based on cheap coal, oil and natural gas.  If through all this the rate of return on investment remains at historic averages, then the rich will get richer at a faster rate than the economy grows (if it grows at all) and increasing amounts of wealth will be concentrated in the hands of a tiny elite.

piketty12growthrate

Source: Piketty, Capital in the 21st Century

Now this could play out in a number of ways.  There could be a sudden collapse, wiping out investments in the fossil fuel industry and the industries dependent on it (such as the auto industry).  Another Great Depression would be a very bad thing, but, like the previous Great Depression, it would be an example of what the economist Joseph Schumpeter called “creative destruction”.  By wiping out capital invested in obsolete or declining industries, it would open the way for new industry.

Unfortunately the known sustainable energy technologies are capital intensive.  That is to say, it is relatively cheap, for example, to build an oil-fired or natural gas-fired electrical generating plant, but the fuel itself is expensive.  With hydroelectric generating plants, windmills or solar energy, the source of energy is virtually free, but it costs a lot to make the equipment, and this requires capital.

Then again, maybe high technology will not be feasible.  Maybe a sustainable economy will be based on earlier types of technology.  If so, this will not necessarily mean less inequality.  Inequality in ancient and medieval Europe was greater than it is now.

A bleak equation.  But there are answers.  I’ve mentioned some of them in a previous post.  A more radical solution would be a redistribution of property so that return on investment would benefit everyone and not just a few.  There might not be a role for limited-liability, for-profit corporations in a slow-growth or no-growth economy.  Credit unions, consumer-owned cooperatives, employee-owned corporations or other forms of organization might work better.  As the Bible says, new wine belongs in new bottles.

Environmentalists will have to face up to this one way or another.  If birth rates fall to a zero population growth rate, this will mean an increase in the elderly population relative to the working-age population.  This can only work if there is an increase in the productivity of the working-age population, and this would have to be accomplished without technologies that burn up fossil fuels at a faster rate.

I don’t pretend to know the future, and I don’t pretend to know what a sustainable economy would be like.  Maybe some miracle technology will be invented that will resolve this issues, and all these concerns will have been for naught.  I wouldn’t count on it

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Simon & Finn on environmental restoration

March 25, 2014

sf-oilsands1small

Whether it is hydraulic fracturing for natural gas, surface mining for coal or processing tar sands for oil bitumen, it is never going to be possible to put the petals back on the flower (figuratively speaking).

http://www.huffingtonpost.com/steven-cohen/the-political-power-of-en_b_859287.html?view=print&comm_ref=false

http://www.dailykos.com/story/2014/03/20/1286250/-Guess-who-s-the-major-stakeholder-in-Canada-s-oil-sands-Of-course-it-s-the-nbsp-Kochs

Click on simonandfinn for more cartoons.


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