Using NATO to fight peak gas

As many of you have probably noticed, there has been an increasingly confrontational relationship between the West and Russia on the issue of gas deliveries to Europe. Over the past year, I have traced this increase in tensions not to Russia's behaviour, but to a clear policy choice made by the UK and the USA to demonize others (continental Europe, for not liberalizing enough, and Russia, for supposedly being an unreliable partner) in the face of their abrupt switch from gas self-sufficiency (counting Canada in the case of the US) to gas importer.

The belligerent rhetoric gained more volume in recent weeks with NATO, the military organisation, coming into the game, first to analyse the "threat", but now as well to offer ways to solve it. And over the holidays, a particularly aggressive article signed by Senator Lugar (outgoing chairman of the powerful Senate Foreign Relations Committee) was printed in the Washington Post and the Wall Street Journal in its editorial pages (sub. only link).

The New Threat to Europe

NATO, Lugar said, should resolve to treat "an attack using energy" the same way it would a land attack by conventional military forces


And, as Lugar pointed out: "The use of energy as an overt weapon is not a theoretical threat of the future. It is happening now."

This comes as close to saying that we're at war (in a new cold war, anyway) as can be found, and that we should use NATO to fight it - which is quite a significant policy step, I'd say...

Let me take you through the whole article.

Adapted from the European Tribune

This year began with a European energy crisis caused by Russia's cutoff of gas supplies to Ukraine, where a democratic government not to the liking of Vladimir Putin had taken power. Because Russian gas passes through Ukraine on its way to Western Europe, the pressure also dropped in Paris and Vienna and Rome -- and Europeans suddenly realized they were dependent for electricity and warmth on an autocracy that was prepared to use energy as a tool of imperialism.

As my regular readers will know, this is a highly partial description of what happened. I wrote at length about last year's crisis, so I can only encourage you to go read again the following detailed posts:

Russian-Ukrainian gas deal - what's behind it? (Jan. 4, 2006)

Russian gas cuts - why there is no need to worry (Jan. 2, 2006)

Ukraine vs Russia: Tales of pipelines and dependence (Dec. 30, 2005)

but I'd note the following:

  • We all forget that Yuschenko was preferred to Yanukovich for the 2005 election by Putin until the West started supporting Yuschenko very obviously and Putin decided, for some reason, that he thus needed to support Yanukovich. It is the West that made that election a West vs Russia contest, not Russia;
  • The gas dispute between Russian and Ukraine had very little to do with the victory of Yuschenko in the Ukrainian election - it was a inside fight between oligarch clans that spilled over in public view. As soon as it did become public, Gazprom reasserted its strategic interests (to be seen as a reliable supplier) and restored supplies before the conflict was solved. If that conflict demonstrated anything, it is that Gazprom cares more than anything else about its reputation as a supplier, and was really unhappy to see it trashed by internal conflicts;
  • Most importantly, it is not "Europeans" that discovered their gas depended on Russia. France, Italy, Germany and Austria (not to mention the former Soviet satellites) have acutely been aware of that dependency for years, and have all taken steps to mitigate it, via long term contracts negotiated with high level political intervention, and a general policy to diversify of supplies. No, those that discovered the issue were the British and the Americans, who experienced gas shortages last year because of declining domestic production, and, being self-sufficient until then, had not worried at all about the issue. So let's stop to make this a "European" issue, and let's call it what it is: an Anglo-Saxon panic attack.
  • as someone who has long been critical of Putin's autocratic tendencies, I'll continue to point out the stunning hypocrisy of those that cheered Putin on when he "restored order" in the early years by fighting the evil oligarchs, but suddenly became "autocratic" when that same fight took on Western-friendly oligarchs like Khodorkhovski.

But anyway, the stage is set: "we" are fighting for our very survival against a ruthless, dictatorial regime.

It looks like the year will end the same way. Georgia and Azerbaijan, two other Russian neighbors that have chosen not to kowtow to Putin, are scrambling to find gas supplies by Jan. 1 to make up for Russian cutbacks or to avoid a huge and predatory price increase. So, oddly, is Belarus, which until now has been a Kremlin client -- but which has resisted a Russian demand that it turn over ownership of a key gas transit pipeline.

I am sure that a lot of people would be surprised to learn that market driven price increases are "predatory". Let's all remember that the issue is that these countries are getting gas at subsidized prices - because Russia chooses to do so in exchange for political advantage. If it feels that it is not getting the political gains it was seeking or expecting, why would it be abnormal to switch back to market conditions? Actually, papers like the WaPo or the WSJ, if they were consistent, should berate Georgia and Azerbaijan for selling out politically to Russia for market-distorting, and fleeting, benefits. Paying the market price for gas sends the proper signal to their consumers and investors, and increasing prices will lead, by market mechanisms, to lower gas demand and a better allocation of resources. Right? So why argue that these countries should get subsidized gas? From Russia?

Western energy companies that have invested in Russia are meanwhile reeling from a crude campaign of bullying designed to force them to give up majority stakes in oil and gas fields to Kremlin-controlled companies. Shell has already caved, allowing Gazprom to take a 50 percent stake in a huge offshore gas field.

The only country in the world where oil companies have not been "bullied" into more favorable terms for the host country is the USA - that reflects the changed balance of power between oil companies and host countries in each case - and suggests that the US government is the weakest and the least able to face oil companies.

Of course, the word 'bullying' is used not to acknowledge that oil companies are agreeing to terms that still make sense to them under current market conditions and a balance of power which is highly unfavorable to them, considering that they are shut out of most countries that still have promising hydrocarbon reserves and that they are happy to take the terms set by those that do tolerate them.

As has been noted, Shell got a pretty good price for its stake in Sakhalin and have very little to complain about, as they've always stated that bringing Gazprom in would be a good thing, and they were properly compensated for that act.

It would be nice to report that in the intervening months Western governments have taken steps to ensure that Russia, which supplies anywhere between 30 and 100 percent of the gas consumed by European Union countries as well as much of their oil, is not able to use this leverage for political or economic extortion. Sadly, the opposite is true: Though "energy security" has become a favorite topic for discussion at E.U. and transatlantic summits, next to nothing has been done about it.

What blatant manipulation of numbers. Russia supplies anywhere between 30 and 100% of the gas consumed by countries that import Russian gas, but many European countries do not actually import gas from Russia, and Russian gas only makes up 19% of EU consumption.

And to say that next to nothing has been done is just as false. The fact is that the war-mongering solutions has not been approved by those countries that actually import Russian gas. Instead, they have focused on extending their contracts with Gazprom, as ENI and GDF recently did - thus extending the solid long term contractual relationship with Gazprom they've already had for decades and which has worked well for both sides so far.

That's partly because solutions aren't easy. Weakening Russia's hold over European energy supplies requires measures that would be costly and difficult, such as building new terminals for importing liquefied natural gas or new pipelines to carry oil and gas from Central Asia and the Caucasus to Europe.

The easiest, and never mentioned, solution, of course, would be to lower our gas demand instead of continuing our mindless policies to burn ever more of the stuff. In particular, we could focus on changing our electricity sector policies, which seem to have a single goal in mind: build more gas-fired power plants. But no, as always the focus is on finding MORE SUPPLIES.

There's a less excusable problem, however: the failure of European Union governments to agree on either a common energy strategy or a policy for responding to Russia's growing aggressiveness. Some politicians, like German Foreign Minister Frank-Walter Steinmeier, propose a new Ostpolitik that would entice Russian cooperation with offers of economic and strategic partnership. Others say the E.U. should refuse to renew an expiring economic pact with Russia unless it stops trying to monopolize European energy supplies.

This is extraordinarily ironic coming form people that relentlessly push market deregulation and monopoly busting within the EU. We should set up a monopsony with respect to Russian gas?? And who would run that body? The European Commission? EU governments? pro rata their gas consumption? Their gas imports? Their Russian gas imports? Utilities? Gas buyers? And would it onsell that gas to EU players on the market? At what price? Who would get the benefit of the presumably lower prices that this body would manage to extract from Russia, taking advantage of its monopsony position? I have yet to see the beginning of any proposal in that respect. Until the practical aspects of this proposal are reconciled with the ongoing market liberalisation that the same people peddle with abandon, I have to call utter and absolute bullshit on them.

Though it has a vital stake, the United States has been mostly missing from the discussion. That's one reason a recent speech by Sen. Richard Lugar (R-Ind.), the outgoing chairman of the Senate Foreign Relations Committee, was intriguing. Lugar has been a pioneer of some of the most farsighted U.S. policies toward the countries of the former Soviet Union, including the Nunn-Lugar program for securing and dismantling nuclear weapons and materials.

I will note here that indeed, the Nunn-Lugar program has been one of the smartest things done with respect to Russia in the past 15 years.

Now he's proposing that the NATO alliance formally adopt "energy security" as one of its central missions. NATO, he told a German Marshall Fund conference alongside the recent NATO summit in Riga, Latvia, is "used to thinking in terms of conventional warfare between nations. But energy could become the weapon of choice for those who possess it.

"A natural gas shutdown to a European country in the middle of winter," he added, "could cause death and economic loss on the scale of a military attack."

This is, again, false and vicious scaremongering. The countries that import most gas, in volume, (France, Germany, Italy) are also those that have the biggest storage facilities, the most diversity of supplies, and the most connections to other countries. The countries that are most dependent on Russian gas, as a percentage of their supplies, are also, for the most part, located on the gas transit routes to Western Europe, and could not be cut off without the rest of Europe being cut off as well. And that would be a pretty stark act by Russia, considering that 100% of its exports go to Europe (not to mention that almost all its oil exports go to the Baltic or Mediterranean Seas and are de facto under the control of European navies), that these exports represent the biggest chunk of its hard currency income and that they have - physically - no alternatives to sell them.

NATO, Lugar said, should resolve to treat "an attack using energy" the same way it would a land attack by conventional military forces -- that is, an attack on one country would compel a response by all. That doesn't mean military action, he said; "rather, it means the alliance must commit itself to preparing for and responding to attempts to use the energy weapon against its fellow members."

Lugar pointed out that NATO used to hold exercises to prepare for the logistical and supply challenge of responding to a Soviet attack. A new exercise, he said, "should focus on how the Alliance would supply a beleaguered member with the energy resources needed to withstand geo-strategic blackmail." This wouldn't be easy, he acknowledged: In fact, "the energy threat is more difficult to prepare for than a ground war in Central Europe." Guarding against an energy cutoff by Russia will mean massive investments in new supply lines and reserve supplies, as well as the means to distribute them in a crisis.

It is ironic that those countries that do have reserves, alternative supply routes and means to distribute them in a crisis are precisely those countries that have been importing gas (not just Russian gas) the longest, and have worried about these issues for a long time - and acted accordingly. But now that suddenly the UK feels itself naked - with its domestic supplies disappearing fast, no storage capacity to speak of, and no long term contracts in place -- it calls for European solidarity - after years of mocking the gas importers for their lack of faith in market solutions.

Again, that same criticism applies to the WaPo and the WSJ. Are they admitting to market failures? Are they saying that there are circumstances where markets do not provide for all demand at the right price? Why else would they need military action - i.e. State intervention? But if they recognize that markets can fail, shouldn't we reconsider the whole deregulation of energy markets? After all, brownouts could also "cause death and economic loss on the scale of a military attack" - and failed deregulation has caused a number of these in recent years. Surely NATO - or at least public - intervention should be useful there as well, no?

That sounds daunting at a time when NATO has its hands full trying to fight a war in Afghanistan. But the energy threat goes to the alliance's historic purpose: defending democratic Europe from attack by the autocratic and belligerent power on its Eastern frontier. And, as Lugar pointed out: "The use of energy as an overt weapon is not a theoretical threat of the future. It is happening now."

Yeah, better to posture, hector and say we're at war with an Evil Empire than actually think about real solutions - you know, those that involve abandoning ideological blinders, a blind trust in "markets", and focusing on things like governments setting long term priorities and imposing regulations or - gasp - spending money to get there.

If energy is a strategic issue, then it requires public intervention and it should not be left to the narrow short term interests of market players. And a note to the Washington Post and the Wall Street Journal: there is more to government than the military.

Just to add to the concerns (within the UK) we've just shut down 2 more nuclear power stations.
Dungness A & Sizewell A have now both officially kicked the bucket.

Plus as far as I know Oldham is effectively shutdown awaiting official decommissioning.

I have a nice PDF with the location of all the UK's 500MW and bigger power stations on it.

It also has some nice charts on it which detail the amount (in GWh) which each type of source has produced each year going back to 2000.

Its interesting to note that in the year 2000, nuclear power in the UK produced close to 23% of all power yet only represented 17% of installed capacity.
It really is a most useful source of baseload power.


Edit: Reposted at bottom of list.

Hello Jerome,

An extremely well-written article--Kudos! I really have no disagreement with your text. In fact, a huge commitment by all NATO countries & Russia to cooperatively conserve and research alternatives would probably generate less stress for all concerned in the long run. That is what I hoped would have been accomplished at the last G8 Conference hosted by Putin in St. Petersberg. Recall my postings before the G8 Conf. urging TODers and others to email the G8 website and push for ASPO's Energy Depletion Protocols to be the framework for this G8 discussion. Result: an opportunity lost.

IMO, Sen. Lugar is irresponsible to hype any idea of a military response as an answer to energy problems. What the world needs is more EcoHouses, bicycles, wheelbarrows, PVs, Windmills, etc; things that will allow the graceful shrinkage of detritus hierarchies to promote the natural connectedness of all men to the essential spiderwebs of Biosolar Life--- NOT rifles, tanks, ICBMs, parasitical political and detritus power elites, etc, in a futile effort to maintain FF spiderwebs that are geologically ordained to eventually shrink, shrivel, and rust away from entropy. In short: Detritus Powerdown and a matching Biosolar Powerup program is the best chance we have to minimize the violence ahead.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?


But even in the narrow world of our "deciders", there would be less confrontational ways to deal with Russia: for instance, by finding ways to help them improve the efficiency of their gas plants (which hovers, as far as I can remember, in the 20s) - something which would free up a lot of gas considering how much they use for electricity. Even if there are no commercial ways to do this, plain subsidies to di it would be good all around.

It’s a great article, I totally agree with your “increasingly confrontational” and “demonize others” points. The details of the various situations from gas to Sakhalin just don’t justify the media’s response.

I think one of the smartest things Europe could do regarding energy security would be to gift Russia a few tens of GW of modern CCGT plant in exchange for like-for-like decommission of inefficient gas plant and some kind of long term contract for Russia to supply the liberated balance of gas. Everyone's a winner, Russia gets new plant and some 'spare' gas to export whilst Europe gets an increased volume of gas than would otherwise be the case. No idea how the economics stack up but I suspect the 'costs' of physical gas shortages in a few years time are greater than the cost of CCGT construction.

Your characterization of Russia appears to omit some things mentioned in the US and web media, as well as being inconsistent:

  • Russia didn't merely renegotiate Ukraine's gas price, it wanted the contract re-opened while it had some time left to run.
  • If Yuschenko was Moscow's boy, is it really true that Putin switched his preference just because the USA liked the same guy?  That means Putin was the one looking for confrontation.  One would expect this to extend beyond the issue of the Ukraine.

Very good all in all, but you show a little tendentiousness as if Russia can do no wrong.

FWIW, Britain has a pipeline built for exporting North Sea gas to its neighbors.  Presumably it sold it at market rates.  Now that the supply is suddenly falling off, why shouldn't Britain demand to import gas at market rates also?  Fair's fair.

1. Actually, it's the other way round: it's the Ukrainians who pushed for reopening the contract despite it having several years to run. As I explain in one of the diaries linked near the top of my story, that's linked to in-fighting between Ukrainian factions vying to be in control of that "private" (and highly profitable) deal to deliver not-Gazprom gas to Ukraine;

2. Yuschenko never was "Moscow's boy", but he was seen as more pragmatic and less opposed to Russian business interests that Yanukovich (who was clearly the top guy of the Ukrainian industrialists of the East of the country, a group wary of their bigger Russian competitors). Why Putin suddenly decided to drop his neutrality toward Yuschenko to back Yanukovich is a mystery to me - and probably was a mistake.

Note that I am not particularly pro-Russia, just really annoyed at some of the arguments used to bash Russia today, which are highly hypocritical. I am comfortable saying this because I've been criticizing Putin for years, and I had no illusions about his peculiar form of "democracy" before, and i'm not suddenly raising the topic today because I'm unhappy about his hardball, but perfectly legitimate, negotiating stance on gas, like the people I criticize today.

Not only that, but why is it that the Russians have any obligation whatsoever to do anything other than what they wish with their own natural resources? They are a sovereign nation, after all. As such, all decisions over how to dispose over their natural resources ought to be considered completely unilateral from an international law standpoint - and, for those who wish to honor international law in a non-hypocritical standpoint, also from a moral standpoint. (This doesn't apply to treaties or contracts that the Russians may have negotiated qua sovereign country; these need to be honored in order that THEY maintain moral and legal consistency with international law.)

Lugar was one of the few senators that faced no opposition in last year's election. He had no Democratic opponent on the final ballot. I doubt that he had to reveal much of his plans during the campaign. For whatever stupid stuff he pulls now, it will be hard to hold him accountable because the voters in Indiana did not demand a decent opponent.

On a more personal level, I can't stand watching Lugar talk. He has this strange facial affliction that makes him look like he is smiling no matter what he talks about. The corners of his mouth curls up every so slightly while his lower lip juts out to give him a perpetual grin. He might as well go all out and put on the Bozo the Clown makeup. I shouldn't make fun of him on a cosmetic level, but exterior appearances and presentation rule in non-verbal communication.

What a great post, thank you Jérôme.

People like Mr. Lugar have to understand that the Thatcher-like politics of selling everything you can the fastest you can are long gone. Now the time is for Putin, Chavez or Morales like politics. You may call them aggressors, but in the end they are just trying to use sensibly their own resources in benefit of their folk.

It’s a new world that unfolds right in front of us.

Agreed. An Excellent post.

Who is Putin?

Ex KGB, Straight into the KGB after Graduating in Law, Fluent German Speaker, Passable English Speaker, A (believed sincere) Convert to the Russian Orthodox church, resigned from the KGB rather than take part in a putsch.

What is he? One time member of the Our Home is Russia Party, he is a patriot. It is his job maximise the value of the assets of Russia and shepard those assets to the betterment of the Russian People.

He holds no job description for supplying Western Europe or anywhere else with unlimited supplies of oil and gas at below market rate.

We have hosed all our gas away, we did not even bother with any real strategic reserve, we have had ten years to think this problem through. We crippled the energy business with deregulation without thinking about the consequences. Well that's what 30 years of an 'entitlement culture' gets you.

And now we throw a hissy-fit.

I wish people like Lugar and Cheney would just stop and think before sabre rattling.

What exactly would NATO be able to achieve anyway?

So what will Putin do next? Probably spend a lot more of his new oil wealth on re-equipping and modernising his armed forces, maybe trade in roubles, which may harden while the dollar softens further.

All Putin is doing is putting Russia first.

The dissertation, which Putin scholars have tried in vain for years to examine, is one of a number of mysteries surrounding the enigmatic Russian leader's academic career.
The official Kremlin biography asserts Mr. Putin obtained a "Ph.D. in economics" in 1997 from the St. Petersburg Mining Institute, but his thesis was for a "candidate of sciences" degree that is considered at least an academic class below a formal doctoral degree.
In a semiautobiographical series of interviews published just after he was named president of Russia in 2000, Mr. Putin does not even mention the thesis, referring only to preliminary work he did on another dissertation on international law at the then-Leningrad State University in 1990 while still formally an employee of the KGB.
It is not even clear when Mr. Putin wrote the thesis, formally titled "The Strategic Planning of Regional Resources Under the Formation of Market Relations," although it is known he returned from Moscow to St. Petersburg in 1997 to defend his work.
What is clear, according to Mr. Gaddy and fellow Brookings researcher Igor Danchenko, is that large sections of the dissertation's central argument were taken almost word-for-word from the 1978 management text "Strategic Planning and Policy," by University of Pittsburgh professors William R. King and David I. Cleland.

Wanna know more about Putin's strategy?

There's also this link.

The Soviet/Russian system of academic degrees isn’t compatible with the Western one.
‘Cadidat nauk’ (candidate of sciences) is a degree one step higher than ‘specialist’ (the lowest). A dissertation of ‘candidat nauk’ must observe the existing theories on the chosen subject and demonstrate the graduand’s ability to operate with this information as well as to give the graduand’s own interpretation of these theories regarding some particular case. In Putin’s work it’s strategic resource planning (general subject) on regional level in transition economy (particular case).
It’s a common practice in Russia. My own ‘candidat nauk’ dissertation consists of (one half) excerpts from many Russian and foreign academic texts and (the other half) my interpretation of those theories in particular instance.


Whatever ''Action'' NATO will take, it will not be likely to involve the Royal Navy:;jsessionid=2KMAQDNS4QNYLQFIQM...

From the Daily Telegraph 05/01/07.


Navy reduced to a coastal defence force.
Navy will be smaller than the Dutch Navy.

So we wont be sailing to Sevastapol any time soon...

Don't take that article too seriously. In case you haven't noticed, the MOD has a cash flow problem and each service is screaming as loudly as possible to keep cherished programmes funded. Its not so much keeping half the existing fleet active that exercises the navy, its keeping the two new carriers on order they are trying to achieve.


We are not a world power any more. This song no longer applies:

''We dont want to fight/
But by Gingo if we do/
We got the ships/
We got the men/
We got the money too.''

Problem is, The USA has taken this song as its own.

Just as Custer took the Chainy Tenth (Hussars) Mess Hall drinking song to heart for the 7th Cavalry.

If you want to know how it sounds , watch Erroll Flynn play Custer...

...And absorb the haunting refrain of an 18th Century Irish Hunting Song from a unit that took part in The Charge of The Light Brigade.

Empires Fade.

"Oh by Jingo, Oh by Gum,
Whatever happens, we have got
The Maxim gun, which they have not."

From these lines the word "jingoism" comes.

you may well be right (again).

Your song is earlier than mine.

Mine is from a Music hall ditty from circa 1905. (at the peak of the Dreadnought Gun-Armour and ''ours against the next two other Navies'' race)

It is interesting where the term Ginjoism originally came from.

No, you are right. Your song dates from Gladstone's agitation for British intervention in the Russo-Turkish war of the late 1870s.
"Whatever happens, we have got ..." is not from a song at all, but from satire by Hilaire Belloc :-)

The difference between us
And the Hottentot
Is we have got
The Maxim Gun
And they have not


We are not a world power any more.

That reminds me of a cartoon (by Australian cartoonist/philosopher Patrick Cook) that dates from the Falklands war. Briton reading the news of the sinking of an Argentine ship, exclaims :

"Now nobody can call us a third-rate power!"

Next frame : thought bubble

"(at least, no fourth-rate ones can.)"

Argentina can take the Fawks any time it feels like it.

We can do Squat.

There is no way that UKGOV could do it again.

Unless we beg the French for help...

Such is the dust of Empires.

The only reason they dont, is because (at least to date ) Is because there is fuck-all Oil there.

When the Argies made a play for the Fawks , they thought the Fawks would be another North Sea level basin.

It has transpired that its greatest wealth is Sheep.

Jerome - interesting stuff, and while I don't know too much about the politics it seems pretty clear that we (the EU) have no God given right to Russian gas.

The main issues IMO are:

1) Russian physical ability to maintain gas supplies - how long can they go on providing for Russia, ex republics, east Europe and else where.

2) Technical / management ability to run the industry without input from OECD companies. My understanding with BP / TNK is that much of the increased production there came simply from efficiency gains - i.e. good asset management.

Russia exports only around 32% of their gas - making their export markets highly vulnerable to any drop in Russian gas production.

I was going to post a map - but still haven't got the hang of Drupal.

1. I accept the general point of peak gas (as per Luis's recent story), but not the point that Russia would be unable to produce gas reserves which are actually there.

2. Gazprom is a pretty efficient company on the engineering side. And it produces more gas than all the Western majoprs put together, has been for a long time, and in much harsher conditions, so I'm not so sure that there would be so much improvement on the gas side (oil is something else, but even there the story is quite complex, linked to the strange incentives of the Soviet times, the abandonment of fields in the 90s, and the get-rich-quick investments made by the oligarchs in the late 90s (to boost production in the short term).

I'm not convinced that Western input (beyond what it can purchase on its own from service companies) will help Gazprom so much on the technical side (it can help for LNG on the global contractual side of a LNG chain, which Gazprom cannot pull on its own), and I have yet to see the demonstration that it would make any business sense for Gazprom to invest more than they currently do: they cannot export more to Europe, and any additional production would be "sold" in Russia at a low price. There were already ominous noises about Gazprom inability to maintain production in the face of the decline of Yamburg and Urengoi a few years back - and presto, Zapolarnoye killed that. Now they are saying that (i) there are no fields, or (ii) they are too difficult fo Gazprom or (iii) too expensive, etc... So far the burden of proof should not be on Gazprom.

Gazprom is much more interested in prestige projects that have nothing to do with gas, than in investing in its core business. And this is unlikely to change as long as the market is rewarding it so richly for its present course. Which, given its dominant position, will be the case for a while.

By prestige you must mean export projects. Gazprom is damned if does and damned if doesn't. Gazprom's pipeline to China is the best investment since it will finally wean Russia off the whinging and sabre-rattling west. Aside from Litvinenko style publicity stunts NATO can do nothing to Russia (assuming that NATO is not run by complete psychiatric internees who think that they will survive a nuclear exchange).

No, I meant things like the appalling skyscraper they are going to build in Spb.

One thing I've never understood about NATO ... is it simply a puppet of the U.S. based military-industrial complex ...

Or is it a European-based body that might someday go its own way, especially if the U.S. government keeps pushing the concept of military imperialism and threatening world stability?

NATO is to politics what an amplifier is to your HiFi. A small change in input (by America) gets amplified using resources from elsewhere (Europe). Similar organizations are the World Bank and the IMF where America is grossly over-represented compared to other countries. Inside the USA, there are also small organizations that, by being focused on single issues, get their way. Just look at US foreign policy. Whose interests does it really serve?


Historically NATO, responding to the fact that the USA saved Europe twice in the 20th Century, has usually had an "Atlantic" view, but some member states were "European" in thought. With 20+ members, they simply do not all agree all the time.

This is a good overview of what the EU wants to create:,2144,2212743,00.html

The EU's ultimate aim, according to the 1999 Helsinki agreement and the 2004 Headline Goal is to create by 2010 a European military force of 50 to 60 thousand soldiers who can be deployed within 60 days and sustained in the field for at least one year.

"European member states spend annually 170 billion euros (215 billion) on defense," said congress president Karl von Wogau, who is also chairman of the Subcommittee on Security and Defence of the European Parliament.

"That's a small amount, some 40 percent of what the Americans spend. But the Americans are saying: You give out 40 percent, but your efficiency is at 10 percent. Which means we lose efficiency by often doing the same thing 25 times," he said.

The EU currently has 6,000 troops stationed in Bosnia Herzegovina and 2,000 in the Democratic Republic of Congo. A mission in Macedonia was also recently completed.

Also see:

Interestingly, the Finnish, German, Dutch battlegroup adopted English as the language they would all work in . . .

is it simply a puppet of the U.S. based military-industrial complex

Yep. Or, in any case, it is the only European institution thoroughly dominated by the US.


NATO was probably one of the most important post war constructs.

1. From 1946 to the fall of the Warsaw Pact it kept the SOVU from pouring armour through the Fulda Gap.
2. It kept the North Atlantic a free and safe place.
3. After WII, It allowed Western Europe to repair, rebuild, replenish. To the point at which it now stands.
4. All the while, Europe +UK were protected by the USA under a Nuclear / MAD Umbrella.
5. Countless numbers of GI's were stationed in West Germany, UK , elsewhere to stop a violation of Western Europe by Warsaw Pact forces from the 50's to the Fall of the Berlin
Wall. This included Jimi Hendrix and Elvis for a while.

NATO worked.

The questions now are:

1. What does it do?
2. Do We (Europe and USA) need it?
3. Does it have a remit beyond the original mission statement?

It is worth pointing out that the USA was prepped to loose New York (and a few other Cities) for London (and a few other Cities) in a Nuke exchange throughout this period.

During this entire period the horse at the plough was the USA. It shouldered the bulk of the burden.

This allowed Western Europe to shelter under the USA while spending little on defence on itself.

The UK tried to keep up for a while, but was basically knackered after two world wars.

We were bled white. (As an interesting aside,I read an article analysing why the British failed in Science, Engineering and Leadership after 1945. The answer was very simple: We lost our best as Air-Crew in the 1941-1945 Bomber Campaign).

The laurels for Western Europe's Freedom from 1946 to current date should go to the USA.

Maggie Thatcher helped.


NATO has lost its way.

Even though the USA shoulderd most of the burden, The USA's current neo-con administration is anathema to most West European Governments and the Sentiments of its people.

(You have know idea just how much political and moral capital GWB, Rumsfeld and angry-hog Cheney have blown away).

I have said this before: In Holland, streets are named after Kennedy, Eisenhower, Roosvelt.

You would not get a dirt track named after the current cabal.

So what happens next with NATO?

The USA has basically ignored NATO since Bosnia and acted unilaterally.

Suddenly, it is useful.

As Russia exerts itself on the world stage as a Nuke tipped Oil State.

PNAC requires subservience from all nations.

Western Europe is still a bulwark against the ''Godless Rushians and the Heathen Chinee''.

NATO could surround the Godless Rushians with satellite states (aka ''Orange Revolutions'')

Suddenly, Cheney turns up on Russias borders in the Spring of 06 and starts telling Putin what to do. Lugar signs off by committing NATO to war if the Rushians dont play ball.

Ask the Germans if they will be happy to trade Thermo-Nuclear ''demand destruction'' over NATO.

Ask the French: Believe me, they will be at lunch that day.

It is a shame that Cheney's brain size matches that of his Dick Size.

Believe me. I know what I am talking about.

I have stood next to Cheney in a Halliburton Pissour.

I understand why he is so mad at the world...


Europeans of short memory forget that when the European nations permorm like preschoolers in a sandbox, it is the U.S. that always has to come along and bail them out, as we did in both World Wars. The U.S. performed magnificently in NATO, but now it is time to take a break and see if the infantile European nations have finally grown up to the point where they can take responsibility for their own actions.

But will they be prepared to spend the money?

And that is what it has always taken:

''If you wish to go to war, you will need deep pockets''. - Cicero (i think)

Dorme Bien.

Crassus said (in Latin) words to the effect: "Call no man wealthy unless he can afford an army."

BTW, Crassus had his own army--arguably the richest man ever in Rome, hence the expression, "rich as Crassus."

Ad Idem


Preschoolers... infantile. No prejudice there. None.

And, Mud, "Europe + UK"? Is the UK not part of Europe?

Only recently.

For most a lot of the post war period your M. De Gaul thought not :-)

In essence, UK has to decide this thorny problem.

Once and for all times.

Trouble is, we are torn between two lovers.

As a Frenchman, I would expect you to appreciate this most exquisite of dillemas...

We Anglo-Saxons have a strange burden to carry:

Are we of the old-world? , Is our destiny with the the new world?

As time goes by and as our credit fails in the world in general, perhaps we will know.

The one thing that really pisses me off though:

It has taken 200 years and many defeats, but the French now have a better Navy than the British...:-(

Big question for you:

Will the pound survive without oil.

Or will we need the Euro more than the Euro needs us (the Brits)?

the French now have a better Navy than the British

Better nuclear deterrent too. Can it still be said that the UK has an independent nuclear deterrent? (am I correct in thinking that the delivery systems are all made in USA?)

will we need the Euro more than the Euro needs us?

I suspect so. I can't see why the UK should be admitted to the euro unless there's a sound business case for it. Solidarity? What a laugh. De Gaulle was right. The UK has done nothing but dilute, weaken and sabotage the EU since it joined.

Actually, Americans seem to have the short memories. As the Germans learned, planning and executing an offensive war is a hanging crime for those responsible - and just following orders or is not an adequate defense.

Further, the Germans have a fair bit of experience in trying to acquire resources or pacify Lebensraum - even using advanced National Socialist methods which the U.S. is just too weak kneed to employ (at least that seems to be the thrust of some neo or paleo conservative writing), it doesn't work.

NATO was many things, but it was never intended to be an offensive war making alliance - if it had, the Germans would not have been allowed to join anyways - no one in Europe (that long memory thing again) wants a Germany oriented to war as a means to secure what it needs - after all, that was the old pattern they all experienced over a couple of centuries.

And NATO was not American altruism either - much of what Americans think was their 'burden' wasn't - for example, all the 'American' facilities in Germany were actually owned and built by the Germans, at German expense - which is why when the Bush League noticed that Germany was an 'unreliable' ally because they actually felt international law should have some meaning in limiting the 'freedom' of a nation to invade and acquire what it wanted (remember the smugness at the 'Iraqi' government cancelling old oil contracts and handing the spoils over to American concerns?), they decided to start rebasing in places like Hungary and Romania - another disaster of fantasy over reality. Nobody in Eastern Europe (or the U.S.) is in a position to pay for and construct the infrastructure currently found in Western Europe - but the Western Europeans, in their naive and smug belief that war is idiocy (long memory thing again), seemed to actually want to constrain the U.S from making one of history's truly stupid decisions - well, who needs friends like that anyways, seems to a broad American belief at this point. When the U.S. is isolated in the world of its making, I expect the incomprehension of Americans at how they went from beloved saviors of humanity to scorned despoilers of the earth to be unbounded. Even worse, they won't grasp how other societies continue to function by ignoring American advice on how to live properly, or why no one wants to be 'rescued' by America and its splendid self-sacrificing virtue - after seeing how well America rescued Iraq, you would think the point obvious, but not apparently to the typical American.

The EU is a fairly smug, hypocritical, and still wobbly organization/institution/experiment with a number of flaws - but compared to already tried alternatives, it seems a much better structure to live within than thinking human society is just a metaphor to hide the reality of endless war for endless peace (how is that Long War going, by the way, the one Europe hasn't joined because they are just too infantile?)

Both Americans and Europeans have short memories. Europeans have much history from which they could learn. "Debacle" is a French word. "Fiasco" sounds somewhat Italian to me. What the word is in German I do not know, but a country that has had leaders like the clown Kaiser Bill or the sociopath Hitler has plenty to remember.

Once again, I ask, when will European nations take responsibility for their own back yard? Why did the U.S. have to intervene in the former Yugoslavia to settle things? Why does Uncle Sam always have to clean up the messes in Europe?

"Fiasco" is Italian ("bottle", or "flask" I suspect).  It was the subject of a puzzler on Car Talk recently.

Germans use the word 'Katastroph' - as in, 'Invading another country to seize its resources becomes a catastrophe.'

They also describe the end of WWII as 'Stunde Null' - or in a slightly less technically correct translation, the start of the new time.

You may be interested in a couple of slightly intriguing facts - Yugoslavia is an oil producer (though a fairly minor one, that fact was one reason the Serbs could defy international sanctions - everyone will buy oil, just ask an American oil company), and southeastern Europe (especially countries like Romania, also an oil producer) is much closer to the Middle East.

Oil didn't start shaping American foreign policy decisions beginning with the Bush League. And no, I am not suggesting that oil was a major factor in Yugoslavia - it is just another one of those little coincidences in terms of where America is willing to oh so selflessly lend a helping hand to those bumbling idiots who don't see the light of freedom shining like a beacon as the bombs strike oh so precisely on target - except for those embassy buildings, which were a mistake. (Think the Chinese have forgotten about that? - hope they have short memories - America's interest in Sudan also comes to mind here, especially as Sudan's oil exports seem to flow towards China at amounts which constitute 7% or more of total Chinese oil imports, according to but luckily, America is again selflessly preparing a humanitarian mission any time now, and this time, you can't blame the Europeans for being uninvolved in their backyard - certainly just another coincidence how oil just seems to be yet again in the ground where America is interested in 'helping' the poor and oppressed.) You would almost think the reason that the Germans invaded Yugoslavia in WWII would have had something to do with oil - nah, couldn't be.

Oil shapes our world much more than most people seem able to accept, even as they drive every day to work, on an asphalt road built by oil powered machinery, on tires made of oil.

Oh, by the way, Slovenia joined the EU in 2004 (they even have 214 soldiers stationed in Kosovo), and Croatia (many of whom at the time were Catholic supporters of the Nazis - yet another reason Croats and Serbs don't get along) and Macedonia are now official EU candidates. As the Serbs also have that long European memory, Germans forces weren't exactly seen as a welcome stabilizer.

Sometimes, Europe would be a lot better place if it didn't have such a long memory about things like war - on the other hand, the last one made such a major impression on just about everyone, many still alive today, they have decided to try something else, knowing that even with its various flaws, at least it isn't war.

And though they may not be thrilled about the EU, it seems like the Eastern Europeans can count on market access and funding by joining (like the Irish, Spanish, and Portuguese did), whereas being tightly allied with the Bush League seems to be worth nothing - as the Poles found out.

The lustre of the American Dream faded a while ago, even in places which threw off their tyrannies pretty much without Western help - ask the East German Berliners, the Hungarians or the Czechs about the big thank you they owe NATO, even as they dreamed of living like we do. Europe, especially New Europe, doesn't owe that much to America anymore - talking about the past tends to be a sign of weakness, as Americans used to so accurately point out when dealing with such former world powers like Britain or France.

Europeans tend to be self-interested and smugly hypocritical - but they don't go on crusades and bomb for peace, since Europeans think that is a pretty stupid way to do things at this point. Iraq certainly hasn't changed any of these preconceptions, by the way.

First let me say that I always enjoy your posts.

One thing you did not mention in the picture is "that little gift" the Europeans granted to US in exchange to US taking over the bulk of the "security burden". Namely the status of the US dollar and the inflation tax which uncle Sam was and is charging every single one outside its borders. An interesting observation, just compare:
1) US military spending
2) US geoverment deficit
3) US trade deficit

Now can someone explain me how these 3 were basically in sync for more than half a century and US never went broke (excluding the mid 70s hickup)? Let me present a picture:

It is July, 1944, Bretton Woods. Europe is in ruins and subordinated. Just about to be "altruistically liberated" by its overseas friends (actually 90% of the freedom burden is carried out by the russian people, soon to become the new "enemy"). A new war is emerging on the horizon, soon to be called a "cold war". In addition to its current military "favour", the new friend offers protection against the new enemy at the gates, but in exchange to a small gift... its currency to become defacto a world currency. Former empires like UK know exactly what this means - nothing less than a world domination and essentially free money for its beneficiery. They try to resist and push their alternative proposal (leader of UK delegation is J.M.Keynes), but of course there is no chance against the pressure of the new "friend". Later on UK decides to join and become a faithful ally of the new superpower to reap some of the benefits. The rest is history...

60 years later, drawing the line... effectively European security has been financed entirely by the benefits brought up by this agreement with the new superpower. A new entity has emerged - the superpower's military-industrial complex - a multitrilion international beast. And all that time the people that effectively have financed it were the people of Europe, Japan, China etc. It is an dhas been a typical bullying deal in which the small neighbourhood store pays for the "security" to the local maphia head. And it gets security, but just wait and see what happens if some store decides not to "obey" and decides to have business by itself...

Very well--but I find it ludicrous that the U.S. still has military bases in Europe. Let Europe take care of itself--are they truly like minor children and totally irresponsible nations? True, European history is basically a grown-up version with guns of preschoolers in the sandbox, but, when will the European nations grow up? When will the EU become more than a convenient fiction? Do we need NATO? Only because the European nations--by themselves--are not responsible enough to make collective security arrangements for themselves.

The military bases in Western Europe were largely dismantled. AFAIK in Germany this was met with a great sigh of relief, as the moral and the behaviour of US military personel, had become let us say... questionable, throughout the years.

The new bases are in Poland, Romania, Bulgaria etc. You make the false assumption that the bases are there because EU requested them to be "protected" from someone. This is so funny you know... Actually it is USA that requested those bases. I have no idea why... but the better proximity with Russia and the fact that 1/3 of European energy supplies go through or in the proximity of those countries may shed some light methinks...

In service of the truth there was some internal pressure for the bases to be build - I can speak only for Bulgaria, but I can suppose that the others were not significantly different. The pressure was from our corrupt politicians who hoped for US funded commissions... err invesments, coming along with the bases. I don't know the price of each one but if we put it to $100mln. for example, this would amount to 10% of the typical annual foregn investments for a country like Bg. A sorry picture, but this is the way it is... of course such arguments don't exist for a country like Germany et al.

One thing I absolutely agree with you - European defense policy (to the extent there is such) is absolutely infantile. The way I see it, US as always, is doing "business as usual" taking over the niche which EU is unable to compete on. Unfortunately this is coupled with policies which frankly can only be described as imperialistic. Add the current hawkish administration and I see a lot of troubles ahead...

One reason that the U.S. still has bases in Europe is that they are essentially state of the art facilities (hospitals, airbases, and training areas in Germany), and replacing them would take years and cost money that the Chinese, for example, are unlikely to lend to pay for.

The Bush League had developed an entirely new basing strategy to 'punish' the old Europeans during preparations for the Iraq war, until some of the adults still actually working for the American government pointed out that a country like Romania does not have the ports, rail, roads, and airports to handle military equipment, does not have the buildings, electrical and communications infrastructure to handle basing, and so on.

Speaking broadly, for the last decade, American basing in Europe has been for American interests - a fact which Europeans are resigned to, but don't exactly see as some great benefit.

After all, America did manage to cut Iraqi oil production, and freeze European companies out of Iraqi contracts using military forces based in Europe, from a number of countries which democratically opposed the Iraqi invasion.

But then, Realpolitik is not something Europeans find strange. These days, it is the famously pragmatic Americans that seem to think pragmatism is the same as morally dubious cowardice.

If the U.S. bases do not benefit the host countries, then why don't those countries simply invite the U.S. to leave (after giving suitable notice)?

I think it is naive in the extreme to say that the host countries do not benefit from these bases. Even European countries try to do what they think is in their own national interests.

I appologise, I was factually incorrect. It seems that West European bases are all alive and well:

It costs the Pentagon about $7 billion a year to maintain its German bases. Ramstein, the biggest, costs about $1 billion - so the others average only about $240 million each, or the same as a single F/A-22 fighter jet. Moreover, the costs of constructing these bases were paid long ago - most were built during the cold war with German money.

Moreover, although the cost of living in East Europe is lower than in Germany, it is unlikely that these countries will contribute to the maintenance of U.S. bases - as Germany has been doing to the tune of $1 billion a year.

hehe externalising costs, how unique...

Since moving to new bases would not save money or improve America's strategic flexibility, there must be another motive. If it is being done to punish "Old Europe" over Iraq, it will be a case of the Bush administration cutting off its nose to spite its face.

2400 years ago, democratic Athens and its navy, a product of its entrepreneurial principles, led Greece to victory against a vast Persian invasion. Afterwards, Athens and its allies formed a naval league for mutual defense. There were two problems. 1. The treasury of the league was in Athens. 2. Athens built all the ships and provided all the crews.

Not surprisingly, Athens came to use its justifiable naval league to bully other Greeks and attempt to impose its own form of government on them. When conservative, undemocratic states like Sparta got fed up with the Athenian game, they formed their own league. It took appallingly little for clever demogogues to talk the Athenian citizenry into war, with the promise that of course there would be booty to seize. Disastrous invasions, shameful massacres, plague, cynicism and tyranny put out the light of Athens in decades of ruinous war. Some of Thucydides' comments about the collapse in the character of Athenians during the war are haunting to read today.

So yes, well-meaning alliances can outlive their justification, especially if one member is too much more powerful than the others. Note that the Project for a New American Century calls for America to crush any other country that becomes too powerful - it didn't exclude the European democracies.

Yes, Thucydides tends to be one of the better historians, with a seemingly clear view of his times, and the universal aspects beyond it, at least in terms of Western politics.

I tend to reread him every decade or so - somehow, it feels almost like a prediction of how America has fared over my life, which comes from watching events over decades, which is the span of his work.

Especially these days, the example of how Athens threw away the admiration it earned, while justifying all its actions as being in the interest of others, until even the Athenians could no longer maintain that facade to themselves.

Not to belittle any aid offered, but the US only threw in their troops when the wars were well underway and their own interests seemed to be threatened. As far as bailing out is concerned, I don't think any of both sides could claim the moral high ground in WWI (but it might be enlightening to check which side had incurred the most debt to US bankers). WWII brought us a truly motley alliance against the nazis, who lost the war on the Eastern front, of course. Military operations after the German military was, for all practical purposes, broken were more concerned with the deliniation of spheres of influence between East and West than defeating nazis. If one claims that the US have saved Western Europe from dictatorship, one could as well claim them to have abandoned Eastern Europe.
After that we have the Marshall plan, which apart from being charity certainly served as a tool to ascertain economic and cultural dominance, as well as providing an alternative for the satiated US consumer goods market to US companies.

Yugoslavia was an embarassment the Europe, no doubt. Don't forget, though, that Europe is slowly but permanently pacifying the area.. that is something one can't do with a big stick. The message about the EU military impotence was received and acted upon; you might check on the functions Solana is cumulating, or which troops are doing guard duty in Afghanistan now, and how much troops the European nations can field, if push comes to shove. Not that I can think of anything or anyone that would start a regular military campagn aimed at the EU - so there is plenty of time.

You forget that the US has a very strong isolationist bent, and in WWII there was a large population calling for the US to enter the war on the side of the Axis.  The US had already cut off oil and metal shipments to Japan, and was providing much aid to Britain under the Lend-Lease program.  But Roosevelt couldn't bring the US into the war until the attack on Pearl Harbor, at which point the US declared war against both Japan and Germany.  The pro-Axis activists were dealt with at that time.

On 7-Dec-1941, the US had been out of Europe a mere 23 years after dealing with the last big problem there.  And you think this nation should have wanted to jump back in?  Would you?

Please, get a grip.

Of course not. Not unless there was an opportunity to gain something. Which is perfectly normal.

Regarding WW I, there was no side with moral high ground. Joining in or not was a purely political/strategic decision.

Hitler declared war on the U.S.--possibly the biggest blunder of his career. Only after Germany declared war on the U.S. did the U.S. declare war on Germany.

Had Hitler not declared war on the U.S. it is doubtful that F.D.R. could have gotten a declaration of war against Germany through Congress. Remember, this was the time of the America Firsters, the time of William Pelley and his Silver Shirts, the time when gullible Charles Lindberg (and his wife) both fell for the Goering/Hitler line and were enormously influential.

While its an interesting article, I would suggest you are being slightly disingenuous. Russia is worrying, and has worried, western european countries for very good reasons:

  • they produce a sizeable percentage of the gas that keeps the lights on.
  • they have demonstrated that they will break contracts, which doesn't say much for those long term contracts
  • chechnya
  • the past position of russia as a superpower, an enemy, and the perception they foster that they would like to get back to that position
  • the inability of the west to do much about it
  • peak oil and peak gas on the horizon, changing the game on exports, production and risk

Look at it like this, if it were Switzerland that had the oil and gas, nobody would worry much. They uphold contracts to the letter, have no imperial ambitions, and could be stepped on if they became a problem.

The west is right to worry about russia, right to assume they will, and are, using oil and gas as a weapon and right to think they need to reduce the risk. The only place the armchair generals go wrong is in thinking NATO and military force. Better to think of reducing the dependency on gas and getting ahead of the game on workable alternatives. After all, eventually everyone will need those alternatives (if they exist) and they can corner the market.

To take your points in order:

1. True. But if we worry about this, we have one solution under our control: reducing our demand, by lowering our energy use, or finding substitute. Maybe we cannot eliminate the problem completely, but we're not even trying.

2. This is quite simply, false.

3. Yep. That's the dark, dark stain. But we let them get away with it for much too long, and then let it be wrapped in the "war on terra", so we're not very credible on this.

4. True, but if you look at is from the Russian perspective, they disarmed peacefully, but that was not enough for the West, which took over its former "colonies", pushed for vicious economic "reform" and widespread looting (note, I'm not saying this is the West's fault this happened, I'm just talking about perceptions) and now that Russia is finally getting back on its feet and in the game, tries to keep it out with hypocritical arguments.

5. See point 1 above.

6. See point 1 above.

Thus I agree with your conclusion.


First, a good overall article by Jerome a Paris, with more depth of thought than is seen in most of the news "analysis" articles we see in the major papers.
The issue is what premise one begins the analysis from.
Are the Russians still "bad guys" from the old "evil empire" days, now using natural gas as a weapon to subvert the "good" Europeans, or are they simply smart, planning a future in which getting the most possible leverage from the natural gas resource they have, to defend and sustain the prosperity and stability of the home nation (Russia), and if the latter, could they be expected to act in any other way?
Since the Russians now have no "ideological" export (such as purist Marxism) and are not seen as religious revolutionaries (such as the Islamist revolutionaries of the Middle East), we see that for the Russians to be seen as imperialists out to subjugate the Europeans, we would have the oxymoronic situation of Russian revolutionaries trying to export a non existent revolution! What the Russians seem to want to export is Russian gas, but at a higher price.

So why the deep concern by American, British and "Anglo Saxon' interests (who are apparently the real villains in Jerome A Paris's mind)?

Simply this: The Americans and British are going to have to enter the world natural gas market soon, and in a big way, but apparently with very little leverage. Coming to a knife fight is always discomforting, but coming knowing that you have the smallest knife in the fight is much more so.

The Americans do still have military power, bought at a HUGE price, so the saber rattling is to be expected. But even Senator Lugar does not endorse (despite the tone the Paris article gives) use of the military to somehow "take" Russian gas by force. They are simply reminding the Europeans (who have virtually no military power) that the U.S. has to factored in, because at the end of the day, we can still provide protection that no one else can provide. In other words, we, like the Russians, are lobbying for the best deal.

For the Europeans, however, the situation is indeed dire, simply because they are now so greatly limited in what they can say or do, and how they can say or do it. They cannot worry themselves with the problems of the Americans or the Brits for now, as they have their own arse to cover, and surely will be cautious not to anger the Russians, as one does not bite the teat that feeds. As Europe faces de facto capitulation to a strengthening Russia, and Russian currency is seen more and more as a REAL currency provided by a REAL nation, backed by REAL assets (oil and gas, among other minerals), as opposed to the Euro, a bogus currency, backed by no home assets, and no REAL nation to back it.

The problem for the Europeans is time, and even much more so for the United KIngdom. They are fighting a horrendous demographic curve, in which they will be a giant indoor/outdoor old folks home very soon. They will soon face having to honor MASSIVE social contracts made over the last half century, or abandon them (a potential catastrophic cultural breakdown). Their export markets are under attack by Asian producers with young populations (as are ours). The only major gas and oil producers they have are leveled off on production and in the case of the U.K., in deep decline. They once dreamed of the "dash to gas" as being Europe's salvation, but now realize that it was based on the projection of a weak, subservient Russia pouring out cheap gas essentially controlled by Western oil companies. This is a Russia that Putin is in no mood to see return.

So, where does that leave three of the five major "developed nations" of the world....The U.S., the U.K., and Japan?

Japan has NO home natural gas, but has long standing contracts with Asian and Pacific suppliers. It can be assumed that more are in the works (some extending forward 20 or more years). For Japan, world stability is everything.

The U.K., as pointed out by Mr. Paris, have virtually nothing. I predicted in another post on TOD that the U.K. is the "canary in the mine", and their ever worsening energy situation would set off alarm bells in the West, particularly in Washington. If Mr. Paris is correct in his read, and Senator Lugar is correctly quoted (and I am sure he is) then so it has, much earlier in the year than I thought. The U.K. now must be waking up to the fact that RADICAL action is needed, and FAST. What course of action is required would call for a separate post.

The United States: Right now, we are being protected by warm weather. If we were having anything like normal winters, we would already be in deep trouble. Our demographic situation is better than Europe's, Japan's, or the U.K.'s, as is our home natural gas supply base. We also have much more waste, which can be trimmed if the will is present. We have a VERY large agricultural base to help provide waste gas and methane recapture can be done on a large scale. We still have untapped gas in the "moratoria" areas of the Western Rockies, and the OCS (Outer Continental Shelf, but not as much as is needed to offset projected declines. We have Alaska, and a possible pipeline, and Canadian exploration, and a possible pipeline. We have the third largest reserves of natural gas essentially in our pocket, but the pocket is very far away, in Qatar.
Qatar is to the United States as Europe is soon to be to the Russians, i.e., essentially subservient, in that without us, the wolves of the Islamic fringe would rip Qatar apart, just as without Russian gas, the Euro would be laid naked on the burning plains and be cooked away.

We can talk all we want about the need for "conservation" and reduced consumption, but the truth is, this is a power game, and the Europeans are running out fast, the United Kingdom even faster. Japan has proven to be very adept at diversifying it's money generation by way of spreading around the globe, building bridges with many nations, and using technology and brains to leverage it's wealth, but it's complete lack of home resources and demographic situation bodes for a tough road ahead. The United States still has big guns, and a historically blessed position due to it's land mass and natural resource endowment, and a population that, while aging, is being kept younger than Europe or Japan by almost open borders with Latin America, something Americans curse, but is a salvation to us in many ways.

At the end of the day, there is only one road forward, given that all the contenders are now beginning to limp a bit: Rapprochement. I know, it's a hated concept, but it must occur. The question: Why should Russia engage in rapprochement when it seems to have all the cards? This can be answered simply: They have a massive threat to their south, in the militant Islamic revolution. Russia has all the advantages with their fellow Europeans. But the Radical Islamists care much less about the natural gas and the money. Russia has to be aware that the bulk of that natural gas they aim to enrich Russia with could fall into Islamic hands just as easily as their "buffer nation" of Afghanistan did, and their "big knife" in the fight could go to those who hate them in a way that we, and the Europeans, do not.

The "West", in that old sense of the word, really does have a MAJOR incentive to stick together. The Russians have never murdered thousands of U.S. office workers. The Americans could not think of abusing and murdering Russian school children. It turns our stomach to even hear about it. One must believe that Putin, for all of his jerking of the European's chain, and the American's, for all of our "tough talk" know that at the end of the day, we understand each other, need each other, and cannot divide the Western world too greatly without suffering a century of suffering at the hands of those who relish our suffering and murder, our complete destruction.

Russia, Europe, Japan, China, South Korea, and the other Westernized, liberated, multi party, technically advanced nations must know in their hearts that after all the rhetoric, THE CENTER MUST HOLD.

THANK YOU. Roger Conner known to you as ThatsItImout

Let me comment on a few things

As Europe faces de facto capitulation to a strengthening Russia, and Russian currency is seen more and more as a REAL currency provided by a REAL nation, backed by REAL assets (oil and gas, among other minerals), as opposed to the Euro, a bogus currency, backed by no home assets, and no REAL nation to back it.

Whoa. You're not being serious there, are you? How is Europe "capitulating" to Russia in any way? And calling the euro a bogus currency simply makes no sense.

They are fighting a horrendous demographic curve, in which they will be a giant indoor/outdoor old folks home very soon. They will soon face having to honor MASSIVE social contracts made over the last half century, or abandon them (a potential catastrophic cultural breakdown). Their export markets are under attack by Asian producers with young populations (as are ours).

Sounds like George Bush trying to sell Social Security "reform". As to export markets, just look at the trade balance of Europe (hint: it's in comfortable surplus)

They once dreamed of the "dash to gas" as being Europe's salvation, but now realize that it was based on the projection of a weak, subservient Russia pouring out cheap gas essentially controlled by Western oil companies.

Russian gas has NEVER been in control of Western companies. Gazprom has always kept its export monopoly. That's what people forget. Germany, France and Italy has more than 30 years of experience negotiating for gas with the first Soviet, then Russian, behemoth. It's always been a wary relationship, but it's worked, based on mutually benefitial long term relationship. Now new players are trying to barge into that game as if it had never been played before, and are disturbing what was mostly working well.

The relationship with Gazprom has never been simple, it has never been dominated by the West, but neither has it been dominated by Russia, and it's the same today. Never forget that 100% of Russia's export capacity goes to Europe. They CANNOT sell anywhere else for hard currency.

The question: Why should Russia engage in rapprochement when it seems to have all the cards? This can be answered simply: They have a massive threat to their south, in the militant Islamic revolution. Russia has all the advantages with their fellow Europeans. But the Radical Islamists care much less about the natural gas and the money.

Sigh... the "Islamic Revolution" is our creature and we should maybe think about stopping to feed it, and to play those stupid scaremongering games.

"the "Islamic Revolution" is our creature and we should maybe think about stopping to feed it, and to play those stupid scaremongering games."

*Sigh* - Tell that to Osama Bin Laden, Mahmoud Ahmadinejad and the followers and enemies of each.

This is a very good post in spite of this silly comment in the discussion. The "Radical" islamic revolution is not "our creature" created for scaremongering games - it is very real and an objective review of the history of the region as well as the words and actions of it's current and recent-past leaders demonstrate that. It is not helpful to ignore the threat of this radical minority within islam.

The Radical Islamic revolution is a goal that is NOT shared by all muslims or all islamic countries. But it is a very real and current direct Threat to all countries in the middle east and this threat is clearly recognized by the moderate muslims and islamic countries in the region.

Oh fuck off.

Osama is a recent US Bogey man. (Except for other members of the Bin Ladan familiy which are associated with the Bush Dynasty)

(6' 5'' dragging a dialysis machine: difficult to nail...)

Ima Dinner Jacket is a local Persian Warlord.

Up until Kuwait, Saddam Hussein was a useful CIA Tyrant.

Lets be honest:

1. Spend beyond your means
2. Buy General Motors Junk (you know it makes sense)
3. Shop at malls.
4. Raise the flag in your garden. Even though your Social Security, Medicaid, job security, pensions, Iraq Veterans rehabilitation have been cut to the bone. While your elite reap the benefits.


We have a saying where I come from:

''He Is pissing on my boots and telling me it is raining''.

The radical islamists of Al-Qaeda and Iran are a threat to most of their neighbors. This is clear to those who live in the region and to most others in the world who are paying attention.

You can get angry about it, make excuses for the radical islamists and their agenda, and even make feeble attempts to minimize the threat they pose. But your fantasy won't change reality.

Maybe you should "wake up" and pay attention to where you are pissing, so you don't piss on your own foot.

Bullshit. Little kids need something to be scared from?

Those damn Bolsheviks! Turn Deutschland over to me, and I will save you from them.

Aren't we citizens firstly responsible, sendoilplease, for our own freedom from our own Christian tyrants? Did we not hold Germany to that standard at Nuremburg?

Pulease.. A small group of men on the run or in hiding do not constitute a threat to the West.

It's funny isn't it... a world's superpower, that can turn Afghanistan into a gleaming site of molten rock, declares that a sick funny man with AK-47, sending pictures to TV stations with his handful of supporters... is the greatest threat to it. This is way off my naivety tolerance limit, but it is sad so many people believe it.

Hi Roger,

Interesting reply and we always enjoy hearing what you have to say.
On the Euro you alwayls take quite an interesting stance on it's viability and status.
And yet the joke is as you speak about the Euro, and have done for a long time,
it sees heavy gains while the dollar tanks. Look at the 5 year graph for goodness sake.
Enough said. It's value as a currency is quite clear.

Your Euro pontificating is laughable.


Futhermore an acquintance of mine is a director of an investment firm and many of their interests are heading for the Dollar exit. Where to? Take a mensa challenge guess? no? o.k. i'll spill the beans - Euro followed by Yen followed by Riminthinghyimnimunimnrimnbi!!

1) the dollar strengthened a bit this week- it is down a little bit in past few months -hardly the exodus that some claim
2) for every smart friend of yours that works as a director of an investment firm that is selling dollars, friends of directors of another investment firm are buying dollars - the market matches them

3)the international financial community will never have the majority of their holdings in a currency of a communist country

Whereas if George Bush were to start imprisoning hundreds or thousands of his critics, or shoot down demonstrators in the streets, the international financial community would continue to support the dollar. Sounds like the international financial community loves tyranny founded on the principle of infinite inequality of wealth - so much that it's willing to rig the very marketplace principles it claims to worship to let that tyranny keep borrowing without consequence.

You might want to update your definition of capitalist/communist. China is capitalistic: they are up to their necks in international trade and financial markets. Not holding elections doesn't matter. After all, General Motors never holds elections, and no one does call them a planned economy either.

>And yet the joke is as you speak about the Euro, and have done for a long time,
it sees heavy gains while the dollar tanks. Look at the 5 year graph for goodness sake.
Enough said. It's value as a currency is quite clear.

Roger is right. Your statement unfortunately is focused on a short term, narrow projection. The only reason why the Euro has been rising is perception of higher value, mainly from Russia and ME countries that wish to avoid doing business with the US or the US has economic sanctions against them (Iran, Syria, etc).

Overall Europe is worst shape that the US (but not by a huge margin). Most EU nations do indeed face a huge entitlement problem as its aging population is consumption more and more economic resources. With in a decade there will be more people collecting entitlements, than people working.

On the resource front. Europe is in a very bad position. It has very little natural energy resources. The Russian Gas crisis is only a small inconvience today. At some point in the future Russia is going to end all energy exports to Europe because of declining reserves and a need to preserve remaining reserves for its own domestic consumption.

What does Russia really need from Europe? Since the rise of the Iron curtain until its collapse Russia was nearly self-sufficient. Its very likely that Putin has this in mind to prevent a second collapse in Russia. Its quite possible that a new wall will be built, but this time its will be to prevent EU citizens from going to Russia.

What does Europe have to offer besides labor, some technology and perhaps tourism? Currently the EU faces its biggest competition from Asia, which India and China each have more engineers and scientists than Europe and the US does. China and India also have an inexhaustable supply of cheap labor and they do not face huge entitlement programs as the West does. This is probably also why Russia seems to making an effort to increase relations with Asia.

I suspect than as energy shortages kick into high gear and entitlement programs begin to fail, there will be another round of political instability leading to the break up of the EU and later another rise of fascism or some form of police state gov'ts. This time the US or other world powers will be unable to be the worlds policemen as they all will be dealing with there own energy and economic crisises.

It is always so enlightening to read informed comments from people living in the world's largest debtor nation about how such places as the world's largest exporting nation face a dismal future - I guess because manufacturing and selling products is so old fashioned that only second rate societies still engage in it.

Or as another article on today's Drumbeat pointed out, Germany's total energy consumption continues to be met by a small, but measurable and growing amount of renewable energy. If you have the money, maybe you can buy some of their tested and currently available infrastructure - they did their planning a few years back, and hope to corner the world market in such areas. They certainly have the advantage of experience, and what is that expression - 'Old World craftmanship?'

Countries such as Germany have been planning and implementing solutions to a number of problems which Americans still seem find hard to grasp. Of course, the solutions may not work, but Germany is pretty far along in attempting them - and in attempting to make money from them. After all, as you pointed out, these challenges are facing most of us, anyways.

Obviously, a society which manufactures infrastructure and high technology, and prizes thriftiness and efficiency, will be hobbled in a race against a society which thinks such things are personal virtues at best, from an older time. Sure, all my money is on the U.S. - after all, any society brimming with lawyers, real estate agents, and celebrities, and which leads the world in patenting financial products (which is just too amusing to imagine) is assured a dead certain place.

You know, I probably have not said this before, but I do enjoy your "outside the bubble" perspective. Please do continue to post on the differences between Germany and the US.

All the old right-wing empires lasted longer than they should have, including Britain. The title "the sick man of Europe" got passed around a lot. Is it possible that the global capitalist elite suspends the rules of market efficiency to subsidize nasty reactionary enforcers like the Hapsburgs, the Windsors and the Bushes?

America's future: the Hapsburgs with nukes.

You started well, but that naive Islamic threat ending ruined everything.

MSNBC is reporting this morning that Norway has enough NG in the Barents to supply Europe for decades. It is being billed as a Norwegian Klondike.

Norwegian Gold

I'd appreciate comments on the report.

I didn't look at that specific report, but earlier reports had the locations very deep. As I recall, a university involved said one location may not be reachable with present technology.

Just read the article:

Russia's known reserves are estimated at 47.82 trillion cubic meters, compared with Norway's total of just 2.41 trillion.


By 2011, Norway has promised to provide Europe with 135 billion cubic meters of gas a year, a rise of almost 50 percent on today's figure.

Russia produces close to 600 bcm/y and already exports 150 bcm/y to Europe. Norway might just replace part of the disappearing production of the UK, it certainly won't substitute for Russia gas. That article's title (and its content if you don't know the background) are just pretending that it's otherwise.


You might want to check this out:

"Today Norway sits on approximately half of the remaining reserves of oil and gas in Europe. It covers 10 per cent of Europe's gas consumption and within a few years will increase gas exports dramatically and account for 30 per cent of European gas imports."

Also note that the Netherlands does contribute a significant but declining percentage of NG to Europe.

Also, Norway resents having other European nations refer to Norway's fields as "Europe's oil and gas."

Conservation is obviously one course that is required.

This is one of the best threads I've ever read here at TOD. Thank you, Jerome, for your involvement here, your insights are most welcome!

I agree with Sunspot. This article, and your earlier pipeline article, are excellent. Information like this is what makes TOD so great.

forgot to mention - "war on terra" is an excellent phrase. I wish I had the courage to put it on my bumper, but I got into enough trouble with "It's all about the Oil" and "Hubbert's Peak is Nigh".

re: BumperStickers..
If it got you in trouble, it's probably was the right thing to be saying.
(Unless of course you're having to replace windows and get repainted, then maybe it's time to think about the Rapprochment mentioned above..)

Thanks, Jerome, for a very helpful perspective. I've listened to LevinK's mentions of the imbalance of reporting on Putin and Russia, and know it's an area I'm grossly underinformed about, as a beneficiary of US reporting..

I don't know enough about Luger, but I've heard so many men from my Dad's generation who have had such an ingrained fear and loathing of Russia and USSR, that it's hardly surprising to see the irrationality in it rise its ugly head once more. I'm not especially 'ProCommunist', but I wonder about the continued Virulence in "AntiCommunism" as it seems to be such a 180 turn from the 'Salvation of Capitalism Idealism' that these detractors of anything Chinese or Russian (Cuban, Venezuelan) continue to persist in, even when these others are, at various levels, playing us at our own games now. I would love to get a glimpse of some of the older histories between the AngloSaxons and the Slavic tribes (or whoever else).. since this mistrust seems much more ancient than just 'Capitalism vs Communism', such as even those terms hardly connote what they denote in this interplay.

I hope LevinK will offer his take on this thread, so I can see any other facets in this issue to make it 3-dimensional for me. We disagree on Nuclear, but do appreciate his comments on so many topics.

Again thanks!
Bob Fiske

I can help here!

Russia and the US were good friends during the American Civil War - the czar freed the serfs in 1863, and then there was that Alaska deal.

Oh, but Britain and Russia were another matter. Britain didn't like competition in the Moslem-exploiting and heroin-growing rackets in Central Asia. Justifying interventions in Afghanistan and Iran. I don't know how Britain justified its 1904 invasion of - get this - Tibet, but I find the hypocrisy delicious.

Lenin or no Lenin, I think it inevitable that America would inherit a belief in all the lies that the British imperialists used when we inherited their empire. Now Blair's Britain returns the favor, cranking out a rash of neoconservative historians spewing excuses for their empire to sell to Americans looking for imperial validation.


Actually I refrained from comments at first as I had that fear I'm a bit partial in my interpratations. Luckily I found enough support to validate that indeed I see what I see and it is not very good.

To be fair my fears are egoistical at their core... I think that the arrogance which US-UK tandem shows in trying to "deal" with Russia is going to play a nasty trick to all of us in the end. They simply don't know who are they messing with - this is not Iraq, neither Iran or North Korea. Just because they succeeded once to subordinate this country, in the beginning of the 90s does not mean they will be able to do it all the time.

Jerome, thank you for a great post. Obviously, I need to know a great deal more before making comments about Russia.

Yeah, I really appreciated someone taking me out of the MSM US bubble (although I could figure out the ridiculous sabre-rattling part on my own...sigh) for a little while. The willingness of the US and the UK to reach for their guns whenever energy comes up is probably the scariest element in this whole scenario, and I'm sure its only the beginning. Get out of the way of those resource wars, they'll be ugly stuff.

NATO to fight Russia for their natural gas?! Does anyone really believe a story like this? Some individual facts in this story might have some truth to them but to try and weave a narrative like what was done here is ridiculous.

People will believe in concepts like peak oil and peak gas as long as the advocates for these concepts are not complete nut jobs. Stories like this don't help.

You should pay attention to the threats you leaders make to other states. NATO made its position quite clear at the last summit in Riga, Latvia. Lugar just affirmed this line in the press.

So how's Ukraine doing these days? I ask, because of two contradictory stories recently in the news.

According to AP, everything's going great. Economy's booming, they're switching to coal, everything's peachy:

Ukraine survives despite gas price hike

The warnings in Ukraine verged on the apocalyptic when Russia sharply raised prices for natural gas a year ago. Many feared factories would close, leading to mass layoffs and grinding industry to a halt. But Ukraine's economy leaped ahead, its businesses quickly adapting to the higher costs.

The BBC has a darker view:

Ukraine still feeling gas pressure

"Life is desperate and with the energy bills going up, it's going much, much worse," she adds.

There is now speculation in the media that some people may simply stop paying their bills.

"This problem may lead to a negative chain reaction," says political commentator Volodymyr Fesenko.

"If the public doesn't pay, this may cause a shortage of funds for the energy companies. This is fraught with political problems and risks."

So who's right? Or is it just that business is doing fine, but the people aren't?

They are probably both true. However our BBC (Big Brother Channel) is notorious for demonizing Russia of late. Therefore it will promote the news that best fits big brothers agenda.


Did you notice that nobody in the world really cares for what the BBC says? For sure Russia won't. And oil and gas fields are not know to watch the telly, either.

'Nobody in the world' ??

Infinite, please get over yourself just a little.

BBC has a way of being very patronizing, even 'imperialistic' in some of their interviews, I've felt.. but they are a long way from being innocuous our ignorable within the world news media.

Actually, the BBC's standing in the world has declined dramatically in recent years, since they went in the tank for Tono.
Sunday, 1 January 2006, 20:59 GMT
Energy and the new world power play
By Paul Reynolds
World Affairs correspondent, BBC News website

The US government's Energy Information Administration tracks the world's energy supplies and needs and has this to say about the European Union:

"The EU is a net importer of energy. According to a report published by the European Commission, (European Union Energy Outlook to 2020), two-thirds of the EU's total energy requirements will be imported by 2020. Eurogas expects that the EU will also import up to 75% of its natural gas requirements by 2020."

My comments:

I believe that the EU now imports 56% of its energy requirements. Note that even though Russia is showing an increase in oil production (although at a rate much lower than previous years), Russian oil exports are down year over year because of rapidly increasing domestic consumption. I predict that Russian oil production will decline this year, accelerating the decline in oil exports.

In any case, I expect that we will see the same “Export Land” dynamics involved in the natural gas market, as domestic Russian consumption increases.

This Export Land versus Import Land problem is what I have been highlighting for one year, since my first post on the subject in January, 2006.

The problem is going to first show up in the oil markets. As I predicted one year ago, Saudi Arabia, Russia and Norway are all showing lower oil exports (probably by 10% plus from 12/05 to 12/06).

Here in the US, virtually everyone (including a large percentage of people on TOD), simply assume that the US has a divine right to a steady increase in total petroleum imports of close to 5% per year.

For US and EU petroleum imports to stay flat, our petroleum consumption, in barrels, has to drop at the same rate that our domestic production, in barrels, declines.

So, the US and the EU are expecting exponentially rising petroleum imports, while the new reality in 2007, IMO, is exponentially declining exports.

Westaxas...Divine Right to hydrocarbons? Weel, of course; Diddint Gawd make the US his chosen nation?

As an aside, I had hoped you would post on how oil reserves are calculated. I work as a geo in the mining biz and I have a good feel for proven/probable, measured/indicated and inferred and that nebulous beast - resource. In the mining biz we drill the piss out of the deposit (often 100-75 foot spacing)then build a geologically constrained the model, then apply various statistics...then voila...raise money! I've always assumed you all do the same.

On a macro basis, I like the logistic (HL) method.

This actually works for most natural resources. One of the famous case histories is a plot of US anthracite coal production.

Does the oil industry use HL to calculate their reserves? If not, how do they arrive at their stated reserves?

I'll defer to some of the engineering types for most of this. Here is a SPE website that discusses reserve estimates:,,1104_12169,00.html

In my little corner of the Oil Patch, I primarily use recovery factors based on similar fields, in terms of barrels of oil per acre foot, to determine possible recoverable reserves for a given trap. As we get more production, log and core data, we turn all of the data over to an engineering firm for a more detailed analysis, and especially for pressure maintenance and secondary recovery recommendations

In any case for preliminary work--for example one of the better pay zones in my area has produced 500 BO/per acre-foot. So, one foot of pay covering one acre yields 500 BO in recoverable reserves. (Some lower permeability zones produced less than 100 BO/acre-foot.)

So, let's assume that we have an estimated field size of 640 acres, with an average estimated net pay of 20'.

500 BO/acre-foot X 640 Acres X 20' = Estimated Recoverable Reserves of 6.4 million barrels of oil. Nothing by world standards, but a very, very good field in the Lower 48. (The last field I found in this range was in 1989.)

BTW, if Matt Simmons is right about oil prices, an oil field like this, found in 2010, would yield cash flows to the working interest owners, after royalty but before operating costs, of more than one billion dollars, or about $1.6 million per acre.

Sounds a bit like basinal analysis in hydrogeology. The SPE site has good basic definitions of the reserve catagories and how they are arrived at. Presumably, in a very small field, you might only have the exploratory well log and your geophysics to determine the field size/reserves before committing to production.

Thank you.

bryant a fundamental difference with oil and gas (at least onshore) is that when a well is drilled, the well is the "mine" and the funding is already in place (or committed). another fundamental difference is that there cannot be oil or gas "reserves" unless the well (mine) is productive. offshore oil and gas reserves would be more like the mining industry in that the project has to be demonstrated to be feasible before any reserves are actually assigned.

Thanks elwoodelmore. That clarifies things a lot.

Richard Lugar's comments indicate the thinking behind the leadership in the USA and EU will inevitably lead to a Last One Standing outcome. As oil and gas production begins to decline the large exporters will naturally want to satisfy their growing domestic consumption first. That will lead to shortages, blackouts and domestic chaos in large importing countries. The need to go to war will become irresistable. A full scale nuclear exchange between the superpowers is inevitable in about 20 years or so.

It would be nice if we could figure out a way to avoid this scenario. Given human nature I don't see how. Universal birth control maybe.

"A full scale nuclear exchange between the superpowers is inevitable in about 20 years or so."

How so? Is it better to have solar heating in your home or to be dead by a nuclear fire storm? I think 99.999% of the population will chose the first solution: solar water heaters. The remaining 0.001% can usually be found in the asylums for the mentaly ill.

Jeez, people. Switch your brains on before you predict doom over something as simple as heating.

If you have ever been to Europe, you will have noticed that they have massive efforts going on to replace conventional energy like oil and gas with renewables. The Europeans are fighting this thing already: with brains. Only the insane in the US talk about war. Probably because it worked so well for them in the past?

'Only the insane in the US talk about war.' From an outside perspective, that is reasonable to write.

However, for most people currently in the American power structure, it is considered insane to think that war won't happen.

And remember, a good offense is a good defense, nice guys finish last, and being the world's greatest superpower means never having to say sorry.

I believe it is reasonable to worry about America's reactions to the coming challenges - after all, unlike Europe, they haven't done much for the last couple of decades but get fat and drive ever larger vehicles while living in ever larger houses with ever more TV screens, appliances, and energy squandering toys. And they still believe more is better, unless you are deranged or anti-American. Even pointing out that the rest of the world isn't likely to be so insane as to desire war as a solution to economic or social problems is often considered deluded.

To give you an idea how fast things can change in "Export Land," the UK was exporting about one mbpd in 1999. In 2005, they became a net importer. The combination of rising domestic consumption and falling production does ferocious things to exports. I now estimate that the decline in Saudi exports from 12/05 to 12/06 was probably in the 13% to 15% range.

However, exactly the same two forces--declining domestic production and rising domestic consumption--are at work in "Import Land," which has resulted in the long term increase in US total petroleum imports of 5% per year. In other words, an expectation of a exponential increase in imports meets the reality of an exponential decline in exports. The math on this subject so clear that I am amazed that it is even considered controversial.

We are rapidly approaching the point, probably in the next one to two years, where the combined petroleum exports from Saudi Arabia and Russia would not meet the demand for total petroleum imports in the US.

Conservative Export Land Model:

The UK went from one mbpd exports to a net importer in six years.

And we see the consequences of that change from exporter to importer in the brutal anti-Russian rhetoric.

I am not optimistic about the likelihood of resource wars. So mush easier to sell to the masses than energy savings, it would seem...

What is there to say?

Lugar is an idiot in the truest sense of the word. Always was, always will be. The only question is what that makes the people who vote for him...

The US threatens to carpet bomb those countires that do not knuckle under to its influence. Russia threatens to cut off energy supplies. MSM hypocrisy is truly astonishing.

Waht is the "radical Islamists" agenda? World domination, like the PNAC'ers? In the process they are destroying liberty in this country, just as they are stamping it out in others.

No, todblog, your current administration is destroying your rights. The 'Islamists' are just the boogeyman being used to frighten you all into accepting their changes. They do NOT represent anything other than an annoyance.

Russia's hutzpah is shocking--they seem to feel that they should control our gas and oil, just because it happens to be under their soil. The nerve of those guys!

FYI, PO bill and 2 others related to energy:

U.S. Rep. Roscoe Bartlett will introduce the following bills in the new congressional term:

-- Peak Oil Resolution -- Reintroduction of H. Res 507 that expresses the sense of the House of Representatives that the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency that was incorporated in the "Man on the Moon" project address the inevitable challenges of "Peak Oil."

Energy Farm Bill -- Reintroduction of H. R. 5925 to support federal research, development, demonstration, and commercial application activities to enable the development of farms that are net producers of both food and energy.

Expanded Tax Credit for Hybrid Vehicles -- Introduced a new bill to increase from 60,000 to 250,000 the annual limit on vehicles, such as hybrids, eligible for the alternative motor vehicle tax credit.

I wonder if it will make it thru??


RE: Main Stream Media

"Abhor Disinfotainment"

"Europe" is a penninsula attached to the massive Russian continent--just look at a map and you can realize this for yourself. This is what MacKinder saw. The only external power to conquer Russia came from the east--the Mongols--a feat no European power will ever duplicate. In one sense Hitler was right: Europe's future is in Russia. But so is China's.

I see Lugar promoting the battle between IOCs and NOCs by linking NATO with the IOCs--one form of corporate socialism versus another. He wants to invoke Friedman's axiom of the US Military as the Right Hand of "Free Enterprise" in a somewhat altered context. His screed isn't all too unusual for any politician suckled on Empire as a Way of Life, for that teet is his life. That Hillary didn't jump up and endorse his words immediately is what's unusual.

And in 80 years when Eurasian NG is close to being all used up and the oceans have risen 2M, what will be the argument for using NATO then? The Russian Revolution's 90th anniversary is later this year. I think of the books Tolstoy and others wrote about life in the "black earth" of Russia and Ukraine and of how soon in the span of the human experience we'll be living that same lifestyle, albeit sexed-up somewhat by technology.

The question for the century is, Can the United States curtail its greedy lust for power and energy and power-down?

"Europe" is a penninsula attached to the massive Russian continent--just look at a map and you can realize this for yourself. This is what MacKinder saw. The only external power to conquer Russia came from the east--the Mongols--a feat no European power will ever duplicate. In one sense Hitler was right: Europe's future is in Russia. But so is China's.

Here are some facts about Russia lifted from the PowerSwitch forum:

- In the first six months of 2005, the Russian population fell by half a million;

- By the middle of this century Russia could lose up to half of its people, according to Russian government stats;

- Life expectancy for men is 56 years, the same as Bangladesh;

- Ten years ago, the life expectancy for men in Russia was 63;

- The World Health Organisation says that at a conservative estimate more than a million people will have died because of AIDS in Russia by 2020;

- Every other newborn baby is diagnosed with a disease at birth

- There are more abortions every year in Russia than babies are born;

- Thanks to ill-health, 10 million Russians are infertile;

- A quarter of the population lives below the poverty line;

- Paradoxically, Moscow has more billionaires than any other city in the world;

- Although Russia's population is in freefall, they're still throwing people out. Thirty thousand Meshket Turks have recently had to seek asylum in America, having been forced from their homes in the south of the country by discriminatory laws and racist attacks.

The inflation adjusted income of Russians has been increasing 10% a year for the last 6 years. The 25% below the poverty line is an outdated figure, the current number is 15%, which is comparable to the USA. Your claim about Meshket Turks is a load of agit-prop BS. There are dozens of minorities in the Caucuses, if one small group was fleeing "oppression" at the rate of 30,000 then there would be similar flight figures from all the others (i.e. hundreds of thousands or millions fleeing). BTW, the Volga Germans have been leaving for Germany by the tens of thousands over the last 16 years and that is not because they are being driven out but because they can move to a better life in Germany.

There are 10 million illegal migrants in Russia. Don't count your chickens before they are hatched.

the current number is 15%

Do you have a source for that? I found this dated 11 March 2005:

According to figures published by the World Bank at the end of last year, 20 percent of the Russian population lives below the poverty line, which is defined as a monthly income of 1,000 roubles (less than 30 euros, or $38). The great majority of Russian families are teetering on the edge of poverty. The World Bank has calculated that an average decrease in income of 10 percent would produce a 50 percent rise in the poverty rate.

As for the Meshket Turks I admit I know nothing about the issue - I was just quoting the comments for interest. Thanks for your information.

Note that 2004 numbers would not include Russia's profits from the recent runup in oil prices.

Then you speak about Russia you should not forget that Russia remains a classic empire despite the disintegration of the USSR. As in all classic empires there is the metropolis which unites hundreds of ethnoses on a giant land mass. These people and territories have very diverse levels of development. Some live just slightly better than in Somalia, some belong to the middle-income rank by the World Bank standards, and finally there is Moscow (12 million people and 4.5 million cars on a patch of land) – the city which is richer than most of the western European capitals.

Well, it sounds like successful Bush-style capitalism to me. What's the problem?

The Independent is getting behind the eight-ball, as the Americans say ...
(will go behind a paywall in a week or so).

This is as good a summary of where the UK is as I have seen anywhere.

And it may be that Mr Cheney's prediction of a 3 per cent annual decline, immensely disruptive as it would be, is indeed, as he said, "conservative". The head of one giant oil services firm has suggested that production might fall by 8 per cent a year, which would mean that supplies fell by half in just nine years. That, after all, is about what is happening in the British North Sea.

Such a slump could hardly be less than catastrophic to the world economy. All we can do is to pray that the peak will be later, and the downward slope less severe - and embark on a crash programme to save energy and develop renewable sources as fast as possible, something we already urgently need to do to try to control global warming.

Lugars remarks are available at the US Embassy website Riga. They were covered by Lord Patel - as well as his seminar in Purdue this last summer @

He is a stiff old soul but talks very directly on the subject. However these pols have very short horizons - he doesn't now as he is at the end of his career and desn't depend on votes.

His Riga speech should be required reading by everyone over 16.

Final notes and clarifications to Jerome a Paris's reply to my reply :-)

By way of clarification, allow me to say that my piece was in no way intended to be anti-European or anti Russian. I am German on mother’s side, and feel grave concern for the future of Europe, and do not think that the Russian intent is to do Europe harm, as much as it is to improve the lot of it’s own population, and it’s position comparative to Europe, Japan and the U.S., which are still the benchmarks in the world.

Now, to Jerome’s objections to my view: Per my quote “As Europe faces de facto capitulation to a strengthening Russia, and Russian currency is seen more and more as a REAL currency provided by a REAL nation, backed by REAL assets (oil and gas, among other minerals), as opposed to the Euro, a bogus currency, backed by no home assets, and no REAL nation to back it.” Jerome replies,
“Whoa. You're not being serious there, are you? How is Europe "capitulating" to Russia in any way? And calling the euro a bogus currency simply makes no sense.”

Indicating that the Euro has been strong for five years, many use this as evidence of it’s overwhelming superiority. This to me does not stand as proof. It is the same reasoning that CERA and other optimists use to “prove” that there is no oil or gas issue to be concerned about, because historically, oil production has always grown when needed, proving that it always will. The European community failure to be able to gain and enforce compacts and covenants is well known, so the organization is essentially to this point a “lawless” organization, with many of it’s own members out of compliance with it’s own covenants. The Europeans have done a great job pushing it’s constitutional collapse off the news pages, experienced by the “non” votes across Europe in the last round of voting.
Does it interest anyone that the European Union predicted “catastrophic” failure when it tried to browbeat the people into voting “yes”, now say that it really didn’t matter when the people voted no? How many organizations in the world, national or otherwise, would be allowed to issue currency with no enforceable rules to back it up? It is to be remembered that the Euro was planned when it was assumed that (a) such enforceable rules would exist in the future and (b) before the recent awareness of major energy issues that could undermine the very validity of European economies. The Euro is the classic case of “the little man behind the curtain” faking to be a giant powerful institution, but no one can say so, because too much is at stake. Americans (many of whom are invested in the Euro themselves) hope the Europeans can pull it off, but honestly do not see how. It is an international Enron waiting to happen.

On the European demographic curve, this is so self evident that I will not comment more than to ask anyone to do a web search concerning European aging.

Some point to European balance of trade. This is to the good for Europe, but again, we must be honest and admit that Europe does everything possible to prevent entry to it’s markets, and does not allow (as does the U.S.) imports to completely run over the home industries. All this is to say, in a polite way, that they are protectionist, and they will ALWAYS do what they must to assure control of their home markets.

Jerome in objection to my statement concerning a “weak subservient Russia” as providing gas to the European “dash to gas” replied, “Russian gas has NEVER been in control of Western companies.” Jerome is correct. But Russian money, and import-export trade has often been. The Europeans MUST have assumed they would have reasonably open access to Russian gas, or the multi year plans to take advantage of what many European utilities called “the fuel of the future” would make no sense. Euro authorities must have known that North Sea gas could not possibly supply European rising consumption, and gas from the Middle East was already under massive demand pressure by the OPEC nations rising home consumption and Asian demand. They did know that, didn’t they? I have difficulty believing that Europe could continue happily assuming that they had a huge advantage over the U.S. and Britain on the natural gas issue UNLESS they assumed that Russia really would NOT begin to march to a path of self determination on this issue. Frankly, this seems to be the reason for so much shock and hurt feeling on all sides: The Europeans thought they had the money, technology and “logistical know how” to keep the Russians pretty much on the path they chose, while the Russians assumed the Europeans would quickly realize their dependency on Russian gas, shut up and accept their dependent position willingly.
Neither side has wanted to play to the assumed role they were assigned by the other. And as I said, time is very much against the Europeans, on energy, on demographics, and on currency (they don’t realize that last one yet, as they assume that “European superiority” will sustain their currency even when they have nothing else to sustain it. This is a mistake the Americans make to as great or greater degree as the Europeans, by the way. But the Americans really do have home resources, and really do still have big guns. Nations spend money for military power for a purpose.

Much contention centered around my remarks regarding the need for the Western liberal cultures to work together to face the Islamist terror threat.
it was answered by Jerome as follows:
“"the "Islamic Revolution" is our creature and we should maybe think about stopping to feed it, and to play those stupid scaremongering games."

I was not the only one who had some problems with that sentence, as the replies to the post showed. Again, I will only attach a couple of links to refresh memories:

If the “Islamic Revolution” is “our creature” it is certainly drawing enough blood to be a major concern outside of the U.S.

The Beslan attack was sickening, pure and simple. Much like the 9/11 attack in America, the Russians have never achieved proper closure on this attack, as the authorities tried to distance it from the public mind to avoid accusations of complete failure in the primary mission of government, that being to protect it’s people. The Russian attack was all the more horrendous in that involved suffering and death of it’s most vulnerable citizens, the children, and demonstrated the willingness of attackers to murder completely without mercy or conscious. The attack was a slander to Islam, and civilized conduct, and seemed to be an attempt to show the Russians that no matter how merciless they were in Chechnya, the Islamist radicals could exceed Russian ruthlessness.

Only a coordinated, consolidated, well planned and well thought out response by the ENTIRE modern world will prevent even greater suffering in the future, and refusal to believe what the adversary is capable of should have been been put to rest at Beslan. It is amazing, AMAZING to me that the ones who remember 9/11, Beslan and Spain, and the explosive attacks on Moscow’s apartment blocks are now seen as the naive ones.

So, the Europeans, being futuristic as always, are getting to the crisis first, with the U.K. on the absolute cutting edge of the catastrophe. The Russians, although they deeply desire to forget Beslan, cannot, anymore that Europe or the U.S., go it alone. The U.S. has a bit more of a cushion in planning time, but to this point, refuse to use it, refuse to admit that post 9/11. post Beslan, post Spain, post natural gas peaking in North America, we are now in an age different than only a few years ago. It REALLY IS A NEW CENTURY.

We must realize that we can either work together, and FAST, or we can slice and dice each other in a battle of “last man standing”, in which the potential for suffering will be magnified beyond comprehension. Of W.W.II, Allbert Camus once commented,
“But for a few distinctions, a thousand cities were lost.”
It can happen.

Thank you, Roger Conner known to you as ThatsItImout

Yep , WW3 is scheduled to a place near you , real soon !

It's not just central asian oil or the nostalgia of cold warriors for their youth , the test will be kosovo in january ~ february !!

I'm not saying that treating an "energy attack" the same as a conventional war is justified, but Russia is really using their monopoly (it really is for many countries) a lot lately.
Just today one of the main oil pipelines leading to Poland through Belarus was shut. This time it's not Russia, but Belarus showing they can play at the same game. Still Poland and Germany will be affected by their "negotiations". Somehow those mysterious technical difficulties always happen in the middle of winter and always when some important political or big business decisions are made.
Russians tried to buy Latvian refinery Mozejki for a long time and when finally a polish PKN bought it, suddenly there was a huge fire in the refinery, followed by a long shutdown of an oil pipeline. Another technical problem.
I agree that for some former Russian republics the prices were very, very low, but still higher than domestic (Russian) prices. Also now the main polish importer PGNiG buys Russian gas for more than Austria, or Germany, the last deal was also negotiated with a strange technical difficulties happening in the background.
Few things you wrote:
- Gazprom can't have a "solid long term relationship" for "DECADES" as it's been founded in 1989.
- those 19% of Russian gas in European market are just a statistical number. Many countries depend heavily on Russian imports - all former soviet republics, Poland, Czech, Hungary, Austria and even Germany (if I recall correctly with 40% of their gas coming from Russia). So it's not ONLY 19% it's millions of people that could suffer heavily from an energy blackmail.
- you say that russia won't shut off gas as it will loose money. That's the most ridiculous statement. If you've been following what Russia did for the last 14 years then you should know what their practices are. They shut down a certain pipeline for just a few days or a couple of weeks, to force higher prices, or forcing other countries to sell them their energy sector companies, or pipelines. So they don't earn money for just a couple of weeks, but then they can set the price at a much higher level, or even take complete control over the energy sector in a given country. That's what is happening now with Belarus.
- You wrote that Russia adjusts the prices to market conditions. Well strangely Gazprom usually has a long term contract signed, so instead of breaking a contract they force other countries to renegotiate them ... and again in the middle of the winter. That's the best time for negotiations right?
So I agree that UK and USA shouldn't be using that war rhetoric and that it's in fact none of their business, but I'm surprised you defend Russian politics and their methods of forcing other countries in a really mean way. Calling this price adjustment or defending Russia’s interests is just a falsehood. Such a dichotomy is getting us nowhere.

Gazprom can't have a "solid long term relationship" for "DECADES" as it's been founded in 1989.

Gazprom was created in 1993 as the successor ot he Ministry of Gas. contracts were signed by the Soviet State via Soyuzegazexport, then part of MVES (ministry of foreign economic affairs), which was brought into Gazprom in 1993. The earlier contracts, which date back to the 60s (Austria) or 70s (Germany, France, Italy) were passed on from Soviet time to Russia.

- those 19% of Russian gas in European market are just a statistical number. Many countries depend heavily on Russian imports - all former soviet republics, Poland, Czech, Hungary, Austria and even Germany (if I recall correctly with 40% of their gas coming from Russia). So it's not ONLY 19% it's millions of people that could suffer heavily from an energy blackmail.

That's specifically addressed in my diary.

- you say that russia won't shut off gas as it will loose money. That's the most ridiculous statement. If you've been following what Russia did for the last 14 years then you should know what their practices are. They shut down a certain pipeline for just a few days or a couple of weeks, to force higher prices, or forcing other countries to sell them their energy sector companies, or pipelines. So they don't earn money for just a couple of weeks, but then they can set the price at a much higher level, or even take complete control over the energy sector in a given country. That's what is happening now with Belarus.

And Ukraine held on, and won these confrontations EVERY SINGLE TIME. Russia lost its credibility as a reliable supplier and no gain.

- You wrote that Russia adjusts the prices to market conditions. Well strangely Gazprom usually has a long term contract signed, so instead of breaking a contract they force other countries to renegotiate them ... and again in the middle of the winter. That's the best time for negotiations right?

annual contracts are usually renegotiated when they expire, at the ned of the year (31 December)

Sorry for the wrong date. Don't trust wikipedia :) When I wrote that I thought that it's strange that the company was founded in 1989 in USSR.
Nevertheless I don't think that Russia really suffered during those conflicts and even if Gazprom lost some credibility not much will change. Europe will still buy more gas and oil from Russia and it will get even more reliant in the future.
And don’t think I’m a Russophobe. I’m sure that any other nation in a situation like that would use their strength and other’s weaknesses in the same way Russians do it right now. Just look at the situation more objectively.

Contracts are negotiated long before they expire. Even if what you are saying would be true and in some mysterious way it's always the middle of the winter, do you think that cutting of supplies is a normal procedure? A typical thing when negotiating?

I find the pissing contests between supporters of the EU or US point of view most revealing: 10, or certainly 20 years ago, such questioning of the status quo would be virtually unthinkable.

I should just add that it turned out, after a couple of hours, that it was Russia that shut down the oil pipeline. Druzhba is the biggest as far as I know oil pipeline in the world, so it's really a major problem.

I don't treat this as a "point of view". These are facts. What would you say if a power plant would blackmail people - either they are going to pay 4 times as much or they are going to cut of electricity in your house. No warning, one day they just nock on your door. Russia does things like that literally overnight without any warning. This shut down that happened today with Druzhba - they admitted it was their doing after something like 15 hours and for that time they were accusing Belarus (that’s why I wrote in the first place it wasn’t Russia’s fault).

How can you explain this in your “Putin good, Bush evil” terms? Just because you're against Bush’s policies doesn't mean you should blindly support everybody who's in the eyes of the neocons an opponent. I completely disagree with the neocon view of the world and their policies, but that won’t make me look more optimistically at Russia’s politics.

No warning?? You must be kidding. Russia has been trying to renegotiate those Soviet-era contracts for years now.

To continue your analogy: what if you paid four times less than your neighbour and your power plant continuously warned you this won't last. Now when it finally manages to make you at least half of the market price you impose 100$/monthly charge for the cables that go through your property to your neighbours. In response it cuts the electricity to your house, to which you respond by hooking up to the wires going to your neigbours. Of course it will cut them off too, any sane person would do it.

I admit my analogy wasn't accurate. Russia cut off oil supply and the whole dispute between them and Belarus is mostly about gas prices (Russia raised the prices twice in a week) and the entrance duty. So it's more like having trouble with electricity bills would mean no water.
Saying that "Russia warned them" is not enough. If they would like to cancel a certain LONG TERM contract they should set a deadline months or maybe even years before. Surprise shut down of this pipeline is nothing but blackmail. What about other suppliers, like Poland or Germany? What did they do wrong? Next Russia cut off the second line of Druzhba leaving Czech, Slovakia and Hungary without oil. Normally in any business a company would first of all secure supply for other clients and most importantly INFORM them! Polish refineries weren't able to get any information for hours and Russian accused Belarus for a couple of hours before they finally admitted it was their fault.
I hope this will lead to policy changes and EU will try to be more self-sufficient in the future. Why do you think nobody speaks any more about Chechnya, or human rights violation inside Russia? Nobody wants to upset Putin ... we all enjoy their gas and oil, so better be quite.

"What blatant manipulation of numbers. Russia supplies anywhere between 30 and 100% of the gas consumed by countries that import Russian gas, but many European countries do not actually import gas from Russia, and Russian gas only makes up 19% of EU consumption."

These are the '2005 Breakdown of EU 25 Natural Gas Net-Supplies' from EuroGas (

Indigenous Production 41%
Russia 24%
Norway 15%
Algeria 11%
Others 9%

According to the International Petroleum Encyclopedia 2006 (Pennwell), the only EU countries that did not import gas from Russia in 2004 were: Ireland, Luxembourg, Portugal, Spain, Sweden and the UK.