NationStates Jolt Archive

Their capitalist abroad, increasingly socialist and communist at home. More Peak Oil signs. We're living in a dangerous time.

Russia has served a double warning over the price of oil and intervention to block attempts by its energy firms to move into EU markets.

Viktor Khristenko, Russian's energy minister and guardian of 5pc of the world's oil reserves, declared that motorists and business would have to learn to live with expensive fuel because "the era of cheap hydrocarbons is over". He also made it clear that any intervention by EU states if Russian firms sought to buy their European rivals would be regarded as unfriendly.

http://www.telegraph.co.uk/money/graphics/2006/06/06/cnruss06.jpg
Viktor Khristenko
In included his pick because I thought it was funny.
He was speaking shortly after the Chancellor, Gordon Brown, indicated that any bid by Gazprom, the Russian gas giant, for Centrica, the British Gas parent, would be treated as a political rather than commercial move.

Russia with its huge oil and gas reserves has been one of the main beneficiaries of soaring oil price and shares the industry consensus that there is little prospect of relief. Mr Khristenko said: "Forecasting is a thankless task in hydrocarbons, but one can say with certainty that the era of cheap hydrocarbons is over."

Mr Khristenko, appointed energy minister by President Putin in 2004, said EU governments should stand back from the merger and acquisition activity in the energy sector which is sweeping Europe.

Speaking to The Daily Telegraph yesterday, he said: "The less political issues there are in this area, the easier and calmer it will be for suppliers and consumers and businesses." In today's global market, a firm's nationality was increasingly irrelevant, he said.

"We have global companies - it can be hard to pinpoint where a company comes from. BP is considered a British company and in America it is an American company. There is nothing contradictory in that because its assets are spread all over the world." Russia was intent on "the expansion of our own participation in others' assets".

He understood the nervousness about Russia's increasing influence - by 2030 nearly two thirds of the EU's gas needs will come from Russia. "If dependency on Russia is not good then one needs to move out of this dependency," he said. "So it is legitimate to encourage Russian participation in other markets like China, Japan and the USA."

Last winter he turned off the taps to Ukraine. Such a situation was unlikely to befall the UK. "Nobody should worry about gas supplies from Russia. None of our contracts have ever been broken. This did not happen, this does not happen and this will not happen."

He denied Russia was using energy dominance as a "weapon". British firms had nothing to fear about expanding in Russia, despite the politically motivated break-up of the Yukos oil group. Times had changed with 50pc of Gazprom now owned by outside shareholders, and the flotation of Rosneft in London later this year.

He pointed to the Putin administration's relaxed view of the steel merger between France's Arcelor and Russia's Severstal.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/06/06/cnfuel06.xml&menuId=242&sSheet=/money/2006/06/06/ixcitytop.html

They're effectively saying: We control your oil and gas, and if you try and stop us we will use it to hurt you.

Using resources as a bargaining chip has been a very concerning and rapid development; the Ukrainian fiasco last year was a sign of this, and I really wonder if Russia would have any qualms about embargoing Europe in the event of a dispute. By 2030, there doesn't seem to be anything stopping Russia from browbeating Europe to get whatever it wants. Thankfully, the seeds of a backlash are building in Europe. Hopefully, they will pursue alternatives to Russian oil and gas fast enough and intensively enough to avoid falling under a new Iron Curtain of energy. If they don't, the future could be very, very bad for them.

Wind power, solar, and other alternatives along with the international European electricity grid are all vital steps in the right direction, and whether they like it or not they will need nuclear and coal to eliminate dependence on Russia. The other alternative is the possibility of an aggressive Russia demanding appeasement in return for energy; I don't trust them, and Europe shouldn't either.

I also wonder how India, China, and Pakistan along with the other former Soviet satellites will deal with a newly assertive Russia; they all need Russian gas to fuel their economies, and if they become dependent on it they will effectively become satellites of Russia. This could pose a serious threat to the US and EU; the world is being drawn slowly but surely along lines of oil and gas, and we can only hope that alternatives are implemented enough to avert resource imperialism.

There might not be a hot war, but the possibility of a new Cold War is quite likely. Unfortunately, it seems too many people are willing to appease the oil and gas producing nations in order to keep their flow cheap and abundant...we could be in for some rough times in the future, even the possibility of a 1973 embargo. And unlike that one, there will not be the independent producers capable of lifting it.

The world's richest proven, unproven, and undiscovered gas reserves are in Iran and Russia...that's more than enough to be concerning to anyone.

I also wonder how India, China, and Pakistan along with the other former Soviet satellites will deal with a newly assertive Russia; they all need Russian gas to fuel their economies, and if they become dependent on it they will effectively become satellites of Russia. This could pose a serious threat to the US and EU; the world is being drawn slowly but surely along lines of oil and gas, and we can only hope that alternatives are implemented enough to avert resource imperialism.

There might not be a hot war, but the possibility of a new Cold War is quite likely. Unfortunately, it seems too many people are willing to appease the oil and gas producing nations in order to keep their flow cheap and abundant...we could be in for some rough times in the future, even the possibility of a 1973 embargo. And unlike that one, there will not be the independent producers capable of lifting it.

The world's richest proven, unproven, and undiscovered gas reserves are in Iran and Russia...that's more than enough to be concerning to anyone.
Big difference between now and the last Cold War is that at least Europe and the US were comfortable in their prosperity. With poverty born of energy resource depletion that probably will not be the case this time.

Unfortunately, Vetalia appears to be right about a cold war over energy. Scandinavian countries are beginning to invest in nuclear power precisely because they don't trust the Russians not to use their oil and gas reserves as a weapon, and I believe that the rest of Europe should go the same way, if not with nuclear power then with wind or solar. Renewable energy isn't just a global warming issue, its also going to allow the large hydrocarbon producers an unacceptable degree of power over their consumers for as long as we rely on their fuels.

Big difference between now and the last Cold War is that at least Europe and the US were comfortable in their prosperity. With poverty born of energy resource depletion that probably will not be the case this time.

And what's even worse is that high resource prices drive economic growth in places with the resources. So, we're not only facing weaker growth but we're also facing a bloc whose GDP could easily be growing in the 5-6% or even double digit ranges. Ironically, it was overproduction of oil in the 1980's that helped to break the USSR...hopefully a price spike will not do the same to us, but who knows?

And what's even worse is that high resource prices drive economic growth in places with the resources. So, we're not only facing weaker growth but we're also facing a bloc whose GDP could easily be growing in the 5-6% or even double digit ranges. Ironically, it was overproduction of oil in the 1980's that helped to break the USSR...hopefully a price spike will not do the same to us, but who knows?
Ahhhhh.....

Me thinks we're all gonna rot in this together...

Or alone, as the case may be. Hopefully running a war on $200/barrel oil will just be too expensive. Every country in the world will have a lot of problems at home that they didn't have during the Cold War. Who knows? :confused:

Unfortunately, Vetalia appears to be right about a cold war over energy. Scandinavian countries are beginning to invest in nuclear power precisely because they don't trust the Russians not to use their oil and gas reserves as a weapon, and I believe that the rest of Europe should go the same way, if not with nuclear power then with wind or solar. Renewable energy isn't just a global warming issue, its also going to allow the large hydrocarbon producers an unacceptable degree of power over their consumers for as long as we rely on their fuels.

I think nuclear along with coal are necessary at least until an international power grid is completed; Europe could then use solar and wind power to a much higher degree than it currently is capable of because the grid would be smoothed out by many wind and solar plants in various parts of the continent, removing the volatility associated with those plants. Hydroelectric and geothermal need to be pursued, and wave power will be vital for coastal regions. Europe could eliminate its dependence on fossil fuels for most of its needs right now, and they are taking some major steps in that direction; hopefully, they will be able to make a transition before Russia has control over them. I think the EU and Japan can do it, but I don't think the rest of Asia can.

This is turning in to a war and it is one that Europe (and Japan) can win. I think they will, but I don't think the rest of Asia or even the US will be so lucky. Remember that during the 1970's Japan boomed due to its energy efficiency and extensive conservation and pursuit of alternatives; if the EU can follow in that path (I think Japan can already and will only get better at it) then there will be a valuable counterweight to the hydrocarbon bloc.

Ahhhhh.....
Me thinks we're all gonna rot in this together...

Well, I don't know. There's the possibility that oil producers will use their revenue to mitigate the surge in fuel prices at least until they peak, so they will have both growth and mitigated inflation.

Or alone, as the case may be. Hopefully running a war on $200/barrel oil will just be too expensive. Every country in the world will have a lot of problems at home that they didn't have during the Cold War. Who knows? :confused:

Hopefully. I think it will be generally peaceful, like the Depression or the 1970's were just out of economic reality...people would prefer those billions be given back to them or provided as aid, not spent on weapons.

[/emigrates to Canada]

[/emigrates to Canada]
Canada's in a tough spot, too. They have oil, but they get their food from an average of about 3000 miles away to the US's 1500. The one thing we do have in North America is a balance, though, between the three countries. Canada and Mexico have oil. The US and Canada have minerals, coal and other resources and the US has food. If we can fix our infrastructure problems and our political problems we may do alright together.