Monday, April 30, 2007

The Long Haul

The intensifying battle in Iraq has riveted the media attention upon it. But it is sometimes useful to step back and see Iraq in the larger context. The story, it turns out, goes not only through the Middle East, but through Europe, Russia and Central Asia as well. In an analysis of the geopolitics of oil in the Asia Times, A New Dividing Line in Europe author M K Bhadrakumar, a retired Indian ambassador to Uzbekistan, asserts that much of US policy since the Kosovo crisis has been driven by a single purpose: to prevent Russia from dominating the distribution of Caspian Sea gas and petroleum. That would give Russia too much power over Europe. Therefore a lot of American effort has been devoted to finding alternative routes from these products.


The geopolitical implications are self-evident. The Russian daily Kommersant was no doubt exaggerating when it commented that with a "gas OPEC" under its belt, "politically, Russia will be able to dictate any terms it wants in Europe. And the EU will be totally dependent on Moscow's political will and will have almost no leverages of its own left." ...

Moscow anticipates that it is only a matter of time before Washington begins to work on the complex interplay of Russian and Turkish interests (a backlog of history) by projecting Turkey as a regional hub for the movement of oil and gas from the Middle East and Central Asia to Europe. Thus the US has backed several pipeline projects bypassing Russian territory, which would envisage Turkey as the conduit for energy supplies transported from east to west.

The Baku-Tbilisi-Ceyhan (BTC) pipeline is the most celebrated case. Two other projects on the table are the Baku-Tbilisi-Erzerum (BTE) gas pipeline, which will run parallel to the BTC, and the Nabucco pipeline that will connect Caspian/Central Asian/Iranian gas via the Turkish gas network to Europe through Romania, Hungary and Austria. Simultaneously, with US encouragement, Turkey has been progressively tightening the screws on Russian tanker traffic through the straits of Bosporus and Dardanelles on the pretext of environmental factors but in effect compelling Russia (and Kazakhstan) eventually to reroute Caspian oil via the bypass pipeline of BTC running through Turkey.

In this battle over oil routes the politics of Islam becomes central to both sides since many of the countries through which the oil pipelines or tankers must pass are Muslim or have large Muslim populations. The question of the proposed grant of independence of Kosovo from Belgrade is a case in point.  Richard Holbrooke, assistant secretary of state in the Bill Clinton administration, the man who negotiated the Dayton Accords, provides an insight into how the Democrat policy professionals want to play the Great Game. He recently warned Russia that peace in Europe and the stability of Russia's own Muslim affiliated states would be at risk unless Russia abandoned their Serbian ethnic relatives to the Muslim Kosovars.  Otherwise the Kremlin's obstruction might make a Kosovo a new cause celebre, a European. Holbrooke said:

If Moscow vetoes or delays the Ahtisaari plan, the Kosovar Albanians will declare independence unilaterally. Some countries, including the United States and some Muslim states, would probably recognize them ... Bloodshed would return to the Balkans. NATO, which is pledged to keep peace in Kosovo, could find itself back in battle in Europe. ... Moscow's point about protecting 'fraternal' Slav-Serb feelings is nonsense. Everyone who has dealt with the Russians in the Balkans, as I did for several years, knows that their leadership has no feelings whatsoever for the Serbs.

This is a reminder of how Russia, America and Europe have all been playing the "Islamic card" as instruments of great power rivalry within Central Asia. The Kremlin, which together with the Europeans historically had the largest Islamic colonial empire may have noted with some irony that Holbrooke now fears Russia could be turning the tables against the West in Afghanistan, exactly where the former Soviet Union was caught. Afghanistan's honeymoon with the press has only been due to the media's fixation on Iraq. In reality NATO is not only facing serious challenges stabilizing Afghanistan, but may be indirectly destabilizing Pakistan as the fight against the Taliban surges back and forth across the border. An ABC News story says:

Afghanistan's U.S.-backed government, tarnished by corruption and unable to control large swaths of its own territory, is rapidly losing the support of ordinary Afghans, the former U.S. ambassador to the United Nations Richard Holbrooke said Saturday. ...

"I can sense a tremendous deterioration in the standing of the government. Afghans are now universally talking about their disappointment with (President Hamid) Karzai. Let's be honest with ourselves ... the government must succeed or else the Taliban will gain from it," he told the Brussels Forum, an annual trans-Atlantic security conference.

Taliban guerrillas have vastly expanded their activities during the past year. Insurgents have now returned to many regions outside their traditional strongholds in the east that were rebel-free since the 2001 U.S.-led invasion of Afghanistan.

Iraq is currently the central battlefield in a complex struggle to over ideology, geopolitics and energy. It is a test of strength between radical Islamic ideology and the West. It is about sectarian conflict within the Muslim world. But it is also about Russia's place in the Middle East and Europe's energy future. Those issues are not bound up by anything local to Baghdad. Blocked or diverted from one place, it is like a current that will move somewhere else.

If the Democrats succeed in forcing a withdrawal from Iraq, the Jihad against the West will shift in focus to from Iraq to Afghanistan-Pakistan, where NATO will be fighting at the end of a long supply line inside a landlocked theater with the potentially hostile nations over every logistical route. Central Asian Republics to the North, Iran to the West and Pakistan to the East and South. It will be interesting to see whether a Democrat administration, having forced the US Armed Forces to accept a defeat in Iraq, can force them to hang on in Afghanistan. It is practically certain that increased combat in Afghanistan-Pakistan will have a much more direct impact on European terrorism than anything in Iraq. It is Pakistan, with its vast network of madrassas, its radical politics and its traditional ties to England which has historically been the West's Achilles Heel. Operation Iraqi Freedom, whatever its defects, unquestionably prevented Saddam from getting an atomic bomb; and it may be still be possible to prevent Iran from obtaining nuclear weapons. But in Pakistan things are already too late for that. It is in possession of a working nuclear arsenal. In Iraq, the West could count on finding allies among the Shi'ites against the Sunnis and among the Sunnis against the Shi'ites. The pickings may be slimmer in Southwest Asia, but America will have to relearn everything, because this is where the central front against radical Islam will soon be moving if the Democrats succeed in shutting down Iraq.

The recent conviction of five British Muslims, all with ties to Pakistan, for plotting a huge string of bombings across the UK highlights the linkage of all these issues in motivating terrorism. Radical Muslim politics, the Great Game and oil geopolitics are all tied together. It is often argued that "Palestine" is at the heart of the world terrorism; that might be true but only if Kosovo can be consider the throat; Pakistan the brain, Central Asia the lungs and Iran the kidney of the entire apparatus. The British had 1,600 suspects under observation, so many that they actually stopped surveilling the cell wich was actually responsible for the London bombing to concentrate on a group they thought represented the larger threat.

Most of the seven men on trial admitted supporting jihad, or "holy war,'' in places like Afghanistan, Chechnya and Kashmir. Several had traveled to Pakistan for training in weapons and explosives. One of the men, Amin, had links to senior al-Qaeda figures and at one stage made inquiries about buying a radioactive ``dirty bomb'' from the Russian mafia, prosecutors claimed. ...

U.K. intelligence officials have said they are monitoring 1,600 other individuals and as many as 30 possible terror plots aimed at causing death and damage to the British economy. ... During 17 days on the witness stand, Babar provided a detailed account of the group's activities, from their military training in Pakistan to efforts to obtain fertilizer and detonators for explosives. Aluminum powder for the bombs' ignition was eventually found in a cookie tin, stashed away in a disused gardening shed in the back of one of the group's homes. Khyam, a cricket enthusiast from Crawley, south of London, organized military exercises around the Afghan border to teach the group what he'd learned, the jury was told. Another suspect, Waheed Mahmood, obtained detailed plans of the U.K.'s gas and electricity network while working for a contractor for utility National Grid Transco. At one point during the trial, prosecutors played a taped conversation between Akbar and Khyam, where they discussed targeting a popular London nightspot.

"No one can turn around and say they were innocent, those slags dancing around,'' Akbar says on the recording.

No matter what the Democrats do in Iraq the war on terrorism has only just begun. It did not really begin with September 11 nor can it be ended by a withdrawal from Iraq. It is part of a world-wide conflict which the religion, history, oil and geopolitics have all conspired to create, and to which so far, we can see no end.

35 Comments:

Blogger 2164th said...

How many more examples are there to make it clear to the next administration that US independence from imported oil is the number one security problem facing the US? GWB stands in denial of the reality and real cost of US oil dependence. There is no sense in expecting anything sensible or responsible from him.

His Republican or Democratic replacement will take steps to achieve a real goal of energy independence.
None of the contenders is enough of a dullard to do otherwise.

It will be up to historians to explain the actions and inactions of "George the Absent" when it comes to an energy policy.

4/30/2007 10:17:00 AM  
Blogger PeterBoston said...

2164th

We have been using oil for more than 100 years. The importance of energy independence has been a talking point of populist politicians for about the same length of time.

When the 500 plus members of the US Congress are falling over themselves to provide incentives to drill offshore and in Alaska - then we can blame the guy in the WH.

4/30/2007 10:39:00 AM  
Blogger 2164th said...

Your apology for GWB was expected, Thanks.

4/30/2007 10:46:00 AM  
Blogger wretchard said...

In terms of physical access, the US imports 57% of the physical product from Canada and Latin America, about 22% from Africa and the North Sea and about 21% from the Middle East, mostly from Saudi Arabia.

In the event of a shutdown of the Persian Gulf the US could physically supply itself to meet basic needs and at the resulting higher prices, Canada will probably eventually be able to make up any difference.

The problem with oil is price. We are dependent on cheap oil. And oil is comparatively cheap only if we keep the supplies flowing. If the Persian Gulf were shut down, Europe, China and Japan would bid for the Canadian, Latin American and African oil to the point where oil would probably be well over a hundred dollars a barrel. The US couldn't keep the fuel "for itself" unless it invaded Canada and Latin America and restricted sales to the America. Energy independence cannot be separated from demand. Each time China ups it consumption of fuel it alters the relative equation between supply and demand.

Part of any solution to "energy independence" would be to ensure world oil supply and distribution system keeps working. George Bush, far from being a dullard, has been accused of waging this war "for oil". If by that is meant trying to keep the world energy system going, he should be complemented. In terms of actual volumes, Iraq supplies less oil to the US than Angola.

But whether George Bush has been doing a good job at keeping the world energy system together is another matter altogether. The Caspian Sea reserves are the obvious focus of the future rivalry. The US has been positioning itself to keep Russia from dominating those reserves. Probably nobody remembers, though I do, how the vilified Donald Rumsfeld moved the US military eastward from its deployments in Europe.

I am fairly certain from Holbrooke's statements, that the Democrats also want to play their version of the "Great Game". Which is why presenting Iraq in isolated context is really a political scam. Whatever happens in Iraq, the forces underpinning the current world crisis means the war will go on. What you have to ask yourself is where the Democrats will succeed in shifting it to. If you like the answer, then that is rational reason for supporting Hillary and Obama. If you don't like the answer then you may want to consider alternative candidates. But the action is not going to stop. It will just change locale.

4/30/2007 11:24:00 AM  
Blogger 2164th said...

"The problem with oil is price. We are dependent on cheap oil. And oil is comparatively cheap only if we keep the supplies flowing."

The problem is consumption at a low price. Any form of an additional price increase on oil is a tax. If after 911 the US government would have taxed imported oil, the demand would have gone down and movement towrds efficiency would have started, especially if responsible political leadership from GWB would have called for action from the American people. That did not happen.

The price of oil on 911 was $24 per barrel. Now the sharp GWB, with US inaction, has allowed foreign suppliers to effectively add $40 per barrel as a producers tax. I need further explanation as to how that is a good thing.

4/30/2007 11:34:00 AM  
Blogger rod said...

If one were serious about energy independence one could in addition to drilling what we can find in house, increase the percentage energy from nuclear power and use the replaced coal for gasification until such time as science and engineering produce technologies that make oil independence ecomonically feasable. Since I have my doubts that ethahol is much more than politicians gassing about real energy alternatives

4/30/2007 11:37:00 AM  
Blogger Elijah said...

For more than 2,000 years, Central Asia has been a meeting ground between Europe and Asia, the site of ancient east-west trade routes collectively called the Silk Road and, at various points in history, a cradle of scholarship, culture and power. It is also a region of truly enormous natural resources, which are revitalizing cross-border trade, creating positive political interaction and stimulating regional cooperation. These resources have the potential to recharge the economies of neighboring countries and put entire regions on the road to prosperity.

About 100 years ago, the international oil industry was born in the Caspian/Central Asian region with the discovery of oil. In the intervening years, under Soviet rule, the existence of the region's oil and gas resources was generally known, but only partially or poorly developed.

The Caspian region contains tremendous untapped hydrocarbon reserves, much of them located in the Caspian Sea basin itself. Proven natural gas reserves within Azerbaijan, Uzbekistan, Turkmenistan and Kazakhstan equal more than 236 trillion cubic feet. The region's total oil reserves may reach more than 60 billion barrels of oil-enough to service Europe's oil needs for 11 years. Some estimates are as high as 200 billion barrels. In 1995, the region was producing only 870,000 barrels per day.

By 2010, Western companies could increase production to about 4.5 million barrels a day (Mb/d)- an increase of more than 500 percent in only 15 years. If this occurs, the region would represent about five percent of the world's total oil production, and almost 20 percent of oil produced among non-OPEC countries.

One major problem has yet to be resolved: how to get the region's vast energy resources to the markets where they are needed. There are few, if any, other areas of the world where there can be such a dramatic increase in the supply of oil and gas to the world market. The solution seems simple: build a "new" Silk Road. Implementing this solution, however, is far from simple. The risks are high, but so are the rewards.

- JOHN J. MARESCA
HOUSE COMMITTEE ON INTERNATIONAL RELATIONS
SUBCOMMITTEE ON ASIA AND THE PACIFIC
FEBRUARY 12, 1998
WASHINGTON, D.C.
...................................
Pipelines -
1) The Northern Route (via Russia): The Northern route would consist of an upgrading of the existing Kazak and Russian pipeline systems, plus a new one linking Baku in Azerbaijan with the Russian port of Novorossisk on the Black Sea. Obviously this is the option favoured by the Russian rulers, as it maintains their dominance of Central Asia and provides a source of revenue to them.

2)The Southern Route (via Iran): The shortest distance as it is able to plug into the Iranian pipeline system and it provides access to the growing South Asian market.

3)The Eastern Route (via China): The longest and most expensive route but favoured by the Chinese government, and being developed by them, it also allows them to exploit the resources in their western provinces.

4)The Western Route (via Turkey): This is favoured by Turkey, the United States, Israel, and the EU. There are three options here; firstly a pipeline to the port of Suspa in Georgia and then through the Bosporus straits to Europe. The Turkish claim is that the straits will not be able to handle the increased amount of shipping and propose instead a pipeline from Azerbaijan to Ceyhan on Turkey's Mediterranean coast. The high costs of this proposal have promoted an alternative American plan to bypass the Bosporus straits with a pipeline going through Bulgaria and Greece.

5)The South Eastern Route (via Afghanistan)It avoids Iran while delivering to the South Asian market, which is much more promising than the European one.
..................................

Today NATO includes former Warsaw Pact or Soviet Union states Poland, Latvia, Czech Republic, Estonia, Lithuania, Romania, Bulgaria, Hungary, Slovakia and Slovenia. Candidates to join include the Republic of Georgia, Croatia, Albania and Macedonia.

How about the network of new US military bases? For example, Camp Bondsteel, at the border between Kosovo and Macedonia. Bondsteel put US air power within easy striking distance of the oil-rich Middle East and Caspian Sea, as well as Russia. Are there U.S. bases in Hungary, Bosnia, Albania and Macedonia? How about Bezmer in Bulgaria?

And in Afghanistan? Bagram Air Field north of Kabul, the US' main military logistics center; Kandahar Air Field, in southern Afghanistan and Shindand Air Field in the western province of Herat. Shindand, the largest US base in Afghanistan, was built some 100 kilometers from the border with Iran. Russia, China, Iran and Arab lands lie fairly close to these bases.

What about Manas Air Base at Bishkek's international airport. Manas is not only near to Afghanistan; it is also in easy striking distance to Caspian Sea oil and gas, as well as to the borders of both China and Russia.

Makes you wonder why Putin is so worried about a paper tiger?

EB - Fri Apr 27, 11:02:00 PM EDT
...................................

Struggling along, no strategic vision at all -
1) Containment of Iran.
2) Detaching Central Asia and the Caucasus from Russian domination.
3) Opening up the area as a major supplier of oil and gas, - in order to diversify global energy production and thereby reduce the power of oil states (Sunni Wahhabism).

The Western Route (via Turkey): favored by Turkey, the United States, Israel, and the EU.

February 25, 2007 -
Turkey and Israel are acknowledging that they are once again discussing the possibility of constructing underwater pipelines from the Turkish port of Ceyhan to the Israeli port of Ashkelon. Ceyhan is now the Mediterranean hub of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline. That pipeline connects Ceyhan to Caspian Sea basin oil sources. Interestingly enough, Israel could ship the oil through pipelines to its Red Sea port of Eilat, and then load the oil back on tankers for shipment to East Africa, India, or East Asia (Japan and China). This is an interesting option for Caspian Sea oil exporters, like Azerbaijan, because it bypasses the Strait of Hormuz, which Iran often threatens to close. The pipelines don't yet exist, but the Israelis are supposed to be willing to put up the capital. Two other undersea pipelines could be constructed, one to carry natural gas and another to ship electricity. Turkey's new hydro-electric power stations are coming on line and Turkey has electricity to sell.

As far as the USA is concerned -
1) A step toward export of hydrocarbons from the Caspian resources to the Western markets in order to decrease the degree of dependence on the Persian Gulf oil (Sunni Wahhabism).
2) Denies Iran oil and gas pipelines of the Caspian region in order to block the expansion of Iran's influence and any financial gains
3) Reduction of the degree of Russian influence on Caspian countries

Elephant Bar - Feb 25, 08:57:00 PM EST (excellent site and commentary for those of u who have not visited)
Belmont Club - 2/26/2007 01:41:00 PM
...................................

Demographics and Iran's imperial design, Sep 13, 2005

Why the West will attack Iran, Jan 24, 2006

4/30/2007 11:41:00 AM  
Blogger Annoy Mouse said...

No war for oil they say. Could the same be said for territory? How ‘bout religion? Society has evolved from burning cow chips under the shade of the olive tree to burning fossil fuels. If the Saudis or the Mullahs have taught us anything, energy equals money and political power can be purchased at the right price. The oil barons fuel their own armies. Monopolies hate competition and global capitalism seems to favor the least democratic national powers. How popular is Greenpeace in Tehran? The Democrats are successful in their Jihad against their sworn enemies, the filthy Shiia, er the Republican party, and the there will always be a little more America to sacrifice to the alter of it’s sectarian power play.

No war for peace.

4/30/2007 11:47:00 AM  
Blogger Ash said...

2164th wrote:

"The price of oil on 911 was $24 per barrel. Now the sharp GWB, with US inaction, has allowed foreign suppliers to effectively add $40 per barrel as a producers tax. I need further explanation as to how that is a good thing."

Well, it is a good thing for GWB and crowd because they don't have to take any political heat for increasing taxes. They are the 'cut tax' guys are they not? Let the market decide...

4/30/2007 12:27:00 PM  
Blogger Ash said...

oh, and add to that the fabulous profits their 'friends' are making and you can see their would be little political will to clamp down on oil prices from those boyz...

4/30/2007 12:29:00 PM  
Blogger wretchard said...

"The price of oil on 911 was $24 per barrel. Now the sharp GWB, with US inaction, has allowed foreign suppliers to effectively add $40 per barrel as a producers tax. I need further explanation as to how that is a good thing"

World price is set by something called supply and demand. Supply, however, is cartelized to some extent. We've heard of OPEC and so has Putin, which is why he wants to create a "gas OPEC". To set prices. After this, politicians want to add taxes of all kinds to it. Here's a table of gas prices in the Western world measured at the pump. The prices in Belgium, France, Germany,Italy, Netherlands, UK, US for a gallon of gas are 6.71. 6.56, 6.71, 6.54, 7.54, 6.93 and 3.08 respectively. Why is gas double the price in Europe? Taxes. Hillary Clinton recently made news by announcing, with some glee "I'm going to take those profits" to create a government programming, referring of course, to the oil industry. The Europeans have been doing this for years. Yet they are no closer to being "energy independent" than the US a fact which Putin knows better than anyone. Kyoto is a form energy tax on the consumers.

But while the world consumes petroleum and market price is a factor, supply will be an important part of the equation.

4/30/2007 02:14:00 PM  
Blogger Ash said...

wretchard,

You make that claim of Europeans not being anymore energy independent then the USA pretty confidently. Why? Do you have access to some pretty convincing per capita energy usage figures? My gut would tell me that the Europeans use of rail transit, smaller cars, diesel, ect. would suggest that they are more independent then the US.

4/30/2007 02:38:00 PM  
Blogger Chavo said...

Den Beste over at USS Clueless put it pretty succinctly a few years ago regarding energy independence vis a vis alternate forms of energy.

1. It has to be huge (in terms of both energy and power)
2. It has to be reliable (not intermittent or unschedulable)
3. It has to be concentrated (not diffuse)
4. It has to be possible to utilize it efficiently
5. The capital investment and operating cost to utilize it has to be comparable to existing energy sources (per gigawatt, and per gigajoule).

You can read the entire post Here.

It's a pipedream that politicians and their ilk like to talk about because the have no understanding of the scale of the problem.

4/30/2007 02:46:00 PM  
Blogger lugh lampfhota said...

Whether we like it or not, we live in a global economy. American energy independence won't mean much if the global economy goes into recession because of high oil prices. The solution to competition is not energy independence, but insuring global free trade without warlord taxes.

We must face the warlords down.

4/30/2007 02:49:00 PM  
Blogger wretchard said...

Ash,

It doesn't matter how little per capita the Europeans use. They won't have any energy to use if they don't get it from the Persian Gulf or from Russia. Period. And part of the reason they may use less energy than America is they pay six bucks a gallon for gas. During the Second World War Japan used a fraction of the gas the US used but it collapsed in large part due to energy starvation. The Yamato went on her last mission with fuel enough only for one way. Energy independence is not equal to energy poverty.

4/30/2007 02:51:00 PM  
Blogger Tony said...

VDH argues that the combination of democracy (people are equals) in combination with capitalism (you get what you earn) has driven the arc of human happiness and freedom since ancient Greece.

If there were a new technology that would make combustion engines obsolete, the never-more-vibrant world market would deliver it right now. Only conspiratorialists could believe GM and Toyota, or the country who went to the Moon on JFK's urging in less than a decade, would sit on a world-changing breakthrough at this point in history. How much could Big Oil pay them - that would be worth more than the next Model T?

It's like a sailor on a boat in a storm just wishing for ocean independence.

Yes, airplanes will someday be invented, but for that sailor on that boat, it's still a theory.

I am starting to believe that even a new JFK couldn't declare us on a race to Energy Independence that we could actually achieve. Too many decades of earnest efforts have passed, we better learn to deal with what we got for now. Maybe some day we'll all drive Teslas, let's start by building nuclear power plants, and electric cars will follow.

So sorry to deliver bad conclusions, but there's a war going on.

4/30/2007 03:38:00 PM  
Blogger wretchard said...

If one were a conspiracy theorist, one could argue that the Global Warming is the modern version of the Disarmament Movement of the 1960s, 70s and 80s. Does anyone remember how many Minutes It is to Midnight? Can anyone still recall the Inevitability of Nuclear Winter? That conveniently segued into the distrust of anything nuclear. Maybe in the long view of history the movie China Syndrome did more damage the West's energy independence than a hundred oil pipeline bombings.

Today we are encouraged to spend billions on carbon offsets. The estimated cost of complying with the Kyoto protocol for the US alone is on the order of 80 to 200 billion dollars per year. And the real question is whether that huge regulatory burden creates a single additional kilowatt or gallon of gas. Probably not. But it will increase the amount of energy involved in doing such things as capturing and storying CO2 in huge underground reservoirs. And in the end all the measures will probably be tied to increasing by tax penalties, the price of gas -- conservation as an alternative to production. And that inevitably means the consumer will be handing over more dollars to Hugo Chavez, the House of Saud and to Ayatollahs, per unit of petrochemical used.

The maskirova for all of this is that it is part of a noble movement to save the Earth; and that all our needs can be met by clean and renewal power like wind farms, solar panels and ethanol. Sometimes in my darker moods I suspect it has nothing to do with it at all. The Green Movement was once the Red Movement. The Global Warming people were not very not long ago the Nuclear Winter people. The very same ones. The transformation of Red to Green in the West is only slightly less remarkable than the transformation of secular socialist politics to Radical Islam in the Middle East. Another change from Red to Green. What is it about those colors? Maybe the Global Warming scare really has to do with undermining the productivity of the West and making it perversely more dependent on oil found in despotic corners of the world in the name of conservation. Well, anything is better than nuclear power, eh? Save the Planet and lose your pants.

4/30/2007 05:06:00 PM  
Blogger 2164th said...

Should I do this once more or should I not?
Yea, I'll do it. I do not recall the anit nuclear crowd of the 60's, 70's and 80's to be about nuclear power but nuclear weapons. The clock hands and nuclear winter was about the expected inevitability of a nuclear war and was not about power. Nuclear power was shelved because the approval process became too long and the nuclear power plants too expensive and risky.

As oil is a commodity the last barrel sold is the price that dictates the current price. If the US, which is a huge consumer, pushes the envelope on consumption, it allows a cartel to fix a price higher than what would be possible if there were no control on production. The issue is that there is a control on production and the cartel can manipulate the demand curve by withholding supply.

A large consumer like the US, with higher energy taxes on imported oil, could force a cartel to pump more to obtain the same revenue as the US would be taking some of the cartel's revenue in the form of a tax. That takes some of Opecs power away and their ability to manipulate the supply. It also allows the consuming country, in this case the US, to shelter alternative domestic energy sources from predatory competition. You cannot have free trade with a cartel.

My premise, stripped of my admitted contempt for the incompetent GWB, is that a historic opportunity for the US to take away economic muscle from the likes of Iran, Saudi Arabia, Russia and Venezuela has been missed. That was not smart.

4/30/2007 05:29:00 PM  
Blogger Mike H. said...

wretchard re: windfarms. Have you no concern for the little birdies? PETA would cry if they heard you.

2164, re: nuclear power vs. nuclear weapons. The one place the anti nuke people were the most effective was in the area of power plants, although I do notice all the new plants popping up next to all the liquor stores. The anti nuke people were against everything including fusion research.

4/30/2007 05:52:00 PM  
Blogger wretchard said...

As oil is a commodity the last barrel sold is the price that dictates the current price. If the US, which is a huge consumer, pushes the envelope on consumption, it allows a cartel to fix a price higher than what would be possible if there were no control on production. The issue is that there is a control on production and the cartel can manipulate the demand curve by withholding supply.

In case you think that US consumption is leading supply at the margin it is not. It is China. The Congressional Budget Office reported that much of the underlying pressure on supply comes from the fastest growing segment of the energy consumption market. China. And that is not just in relative, but in absolute terms. By 2008, the additional demand by China will be double the additional demand by the United States and almost as much as the increases required by the rest of the world, less the United States, put together.

But it is really the complex interplay between supply, demand and cartel decisions that determine what the price of oil is gong to be. Just because consumption is low doesn't mean prices are going to be low. The real price of oil was $80/bbl in 1869. Political events and mis-estimates by the cartel in what demand might be play a very large part in setting the price of oil. The real price of crude oil rose from $25/bbl on September 11 to $60/bbl today. Was the rise in US consumption very marked since September 11? The price increases were in part caused by 9/11 itself and the geopolitical tensions which followed. Using plastic bags instead of green bags at the supermarket contributed very little to price increases.

The Peak Oil people argue that we are in a fundamentally different situation today than ever before because all the petroleum that is ever going to be found has essentially been found. And alas, much of that is in Middle Eastern or Muslim countries. All the more reason for taking a broader view of energy. Peak Oil does not mean Peak Energy if other sources can be found. But over the next ten years it is unlikely that such energies will come from solar power or windfarms. Nuclear power has potential, but the industry has been in the doldrums for years and only recently has the first tentative permission to start a new one been issued. In the near future, energy independence for most of the world means making sure the existing oil production and distribution system works to best of its ability. And that means free from disruption by terrorists or former KGB men.

4/30/2007 06:06:00 PM  
Blogger weswinger said...

GREAT THREAD!

Daniel Yergin's book The Prize (or the PBS video series) is recommended for those interested in the energy industry.

Elijah's post on transportation is spot on - bringing remotely produced supply to the market is now the critical issue. The US had a crucial advantage over the other industrialized nations in the early 20th century with large supplies in Texas and California.

2164th needs to take a closer look at the benefits of confiscatory energy taxes. The EU clearly shows that they buy more bureaucracy, not innnovation. Remember the P.J. O'Rourke simile: giving politicians money is like giving a teenage boy a fifth of whiskey and the car keys.

Shamefaced disclaimer: I greatly admire the the European train systems, and as an electric utility employee I'm all for electricity-intensive transportation. Wretchard has the history correct again in his indictment of the Red to Green morph, and that any obstruction to progress is a victory to them. They didn't proudly call themselves "monkey wrenchers" for nothing.

The electric utility industry is decades away from being able to supply anything but a small fraction of the transportation sector. We will be hard-pressed to serve our own traditional markets' peak demands this summer. And the reason for this?, he asks rhetorically, is 1) the difficulty and huge expense in siting new nuclear and coal power plants and 2) building the extra high voltage transmission lines to bring that supply to the demand and 3) the lack of confidence that those investments would be recovered in rates.

Thanks for letting me share.

4/30/2007 07:41:00 PM  
Blogger j willie said...

2164th said to Peter Boston:

Your apology for GWB was expected, Thanks.

You have an entire blog dedicated to your particular strain of BDS; for you to comment about your expectations from someone else is patently absurd.

4/30/2007 09:18:00 PM  
Blogger Doug said...

Deniers, one and all!
As Rosie and everyone with half a brain knows, fire won't burn steel.

That being the case, what better proof is there of Global Warming than that Bay Area Freeway suddenly collapsing, supposedly from a tiny Tanker Fire?

We non-deniers know better.

4/30/2007 09:53:00 PM  
Blogger Seagullz said...

A leetle ray of energy hope is in thin-film solar: companies are ramping up the production right about now. Try Nanosolar or Heliovolt for starters. Good ol' US of A ingenuity. Solar panels by the acre. I know this sounds a bit Polyanna-ish, but this here thread could do with a bit of lightening up.

4/30/2007 10:09:00 PM  
Blogger Tarnsman said...

Seagull, you really need to follow the link to Steven den Beste's piece above. Solar panels by the acre are going to cause serious local, and perhaps global, weather disruption. Besides, underneath all those solar panels will be nothing but dirt, scrub grass and a few insects as the panels will stealing the life giving rays of the sun. There is no 'silver bullet'.

4/30/2007 10:32:00 PM  
Blogger weswinger said...

And furthermore. . .

sorry seagullz, but you should have been with me the morning of January 15, 2007 when the Western states were in the grip of record cold and I was trying to stay ahead of unprecedented heating demand. Guess what, not only was it cold, but because the region was uniformly cold, it was absolutely still - no wind Watts, and furthermore. . .it was dark.

I am compelled to add to my post above on impediments to using more electricity to achieve the nostrum of "energy independence". Another obstacle is the Federal Energy Regualotory Commission's (FERC) efforts to deregulate the electricity industry. They followed Enron's recommendations and imposed a natural gas pipeline industry model on the electricity grid. The FERC wants to see separate transmission and generation companies. They never took a timeout and reconsidered their industry model from the standpoint of: if Enron wanted this could it possibly be good for the industry and its customers?

4/30/2007 10:56:00 PM  
Blogger 2164th said...

Yes, j.willie, I do have a blog that is dedicated to the truth, no matter how painful, as opposed to wishful thinking. Wretchard also maintains a blog open for debate about the truth from his point of view. I have never detected that he feels threatened by dissent. I cannot say the same about some who post here.

One of my fascination in life is trying to understand defenders of the indefensible, regardless of the evidence. I am not threatened by those who go through life as Dr. Pangloss. That is why, you and others who believe in GWB are welcome to express your gospel and condemn me and others as having a DNA based deficit, which you call BDS over at my blog.

Muslims call non-believers infidels and in doing so fortify themselves to justify and then commit their atrocities. I guess true believers of George Bush, such as yourself need to label your perceived enemies as being congenitaly deranged. I do not expect you will do any more about it than talk but at least enjoy the irony.

5/01/2007 12:47:00 AM  
Blogger PeterBoston said...

Ascribing the price of a commodity produced in dozens of countries, consumed by billions, and traded 24/7 by millions of market participants to a single individual on Pennsylvania Avenue who has no mechanism for doing so is hardly a search for the truth.

5/01/2007 02:44:00 AM  
Blogger Bart Hall (Kansas, USA) said...

As a guy whose first two degrees are in geology and who spent a few years hanging around the Alberta oil patch, I'd add one reminder to all those claiming that American energy independence is the solution to all our problems.

The energy market is a world market. We will most decidedly not be insulated from any Middle East shocks, even if every single millilitre of our petroleum (and substitutes) comes from within North America.

Prices do not have to increase by much in Europe (or Japan) for it to become profitable to ship American energy overseas. It is a false "solution."

5/01/2007 05:19:00 AM  
Blogger allen said...

bart hall (kansas, usa),

re: Prices do not have to increase by much in Europe (or Japan) for it to become profitable to ship American energy overseas.

Nothing will be shipped overseas! Don't you know, the American "mercenary" military will step in at the behest of BushHitlerHalliburtonIsraelCheneyal-MalikiRiceKnewof9/11Conspiracy etc, etc, etc?
;-)

Well, the mercenary military will step in if it is not too busy sending innocent service members to the gallows and dungeons, a la, Haditha.

5/01/2007 05:57:00 AM  
Blogger allen said...

Australia is going nuclear, but it will take awhile - 2050.

Will this please the Japanese?

Will this bother the Chinese?

What will the Iranians say?

Australia will change law to embrace nuclear option

***

5/01/2007 08:23:00 AM  
Blogger TM Lutas said...

2164th - We're only now recovering from the govt. funding gusher that was the appollo program. Please stop advocating we get on the same stupid roller coaster for energy policy. We're intelligently encouraging and enabling the production of liquid fuels from coal (which we have plenty of) by setting up a guaranteed market where the DoD will buy that stuff up as jet fuel even if energy prices collapse (which killed our last coal to liquid industry in the 1980s). The biggest coal producer in the US (possibly the world) just announced that they're entering that market. We have enough reserves of coal to gain energy independence. We're also pushing for hydrogen as a sort of energy middleware so that all sorts of small and medium sized energy sources can be converted into transportation fuel. When GWB came to office, a gallon gasoline equivalent (gge) of hydrogen was $6 via electrolysis. GE just announced a scalable machine that can do it for $3. The goal that the govt. R&D boys are funding is $1.50 by 2010. Coincidentally that's when another set of government goals to create a car that can run on hydrogen that is commercially feasible will also be met. A Canadian company called Ballard is promising to meet or exceed the goal by then and GM has its own program, claiming to start shipping hydrogen cars by the 2011 model year.

In short, try researching then writing.

elijah - You missed a western route, PEOP going via Romania, Serbia, Croatia, Slovenia, and Italy was finalized and is starting to gear up for construction as of last month. Tankers will be able to transport on the Black Sea without having to pass through the straits. They'll end up building up the port in Supsa to avoid Russian pressure but for right now they'll port out via Russia's black sea oil terminals.

chavo - I was one of DenBeste's protagonists on that discussion (and I count myself a friend). He was correct as to principles. I still maintain that he has underestimated human ingenuity. He's not the first very smart guy to do so nor will he likely be the last. For instance his comment on solar cells not capturing the right wavelengths has been overtaken by events (3D solar cells can capture a lot of wavelengths and obliquely so you don't have to have motors shifting the panels) though his comments on microwave power transmission remain depressingly dead on.

5/01/2007 12:14:00 PM  
Blogger Norman said...

TM Lutas wrote "2164th - We're only now recovering from the govt. funding gusher that was the appollo program. Please stop advocating we get on the same stupid roller coaster for energy policy: "

Pardon my ignorance here, but what does the Apollo (sp) Program have to do with energy?

Thanks,
Norm

5/01/2007 03:06:00 PM  
Blogger Nichevo said...

Norman,

I think he means: govt megaprojects tend to suck.

5/01/2007 03:48:00 PM  
Blogger geoffgo said...

seagullz,

Before we get too "inspired," consider this.

Here is an incontrovertible fact, so far:

No solar technology in use today will ever recover the cost of the energy used to produce it.

Besides which, the metals and chemicals they use to produce solar cells are really dirty.

Don't mean to be a doomer, just a realist.

5/01/2007 07:02:00 PM  

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