Posted on 07/24/2014 6:29:31 PM PDT by Kaslin
When president Obama announced last week that he would be imposing of a new round of sanctions on Russia, he made sure to stress that the package was designed to inflict “maximum” damage on Russia, “while limiting any spillover effects on American companies.” Left unmentioned: the fact that, earlier that same day, officials from the European Union called to inform our State Dept. that they wouldn’t be able to follow suit.
If the administration wanted to go forward, they said, it would need to do so unilaterally. Less than a week before, a State Dept. official testified before the Senate that sanctions “could only be effective” if they were done on a multilateral basis. Absent that, the administration official predicted, European firms might just “backfill” the work that U.S. companies would be forced to leave behind.
If the success of unilateral sanctions is uncertain, and military intervention is off the table, what other options does America have available to influence Russian behavior and help bring an end to the escalating violence in the region? We can start digging in to Russia’s significant share of the global natural gas market.
Unfortunately, despite overwhelming bipartisan support in Congress, nearly two dozen applications to export natural gas remain pending before the Department of Energy – trapped in the bowels of the bureaucracy. In addition to the enormous benefits the U.S. economy would see from expanded natural gas exports, it would also signal to the global marketplace that the U.S. is a reliable supplier, now and into the future. A report from Deloitte released last year found that even moderate levels of U.S. natural gas exports could result in a wealth transfer of up to $4 billion from Russia to European consumers through reduced contract prices and market share.
In failing to follow the law and in making the rules up as it goes, the Obama administration has essentially delayed the development of projects that would create – in the words of DOE’s own third party study – “net economic benefits,” encourage greater investment into the U.S. bolstering our manufacturing industry, significantly lower global carbon emissions and, last but not least, send a clear signal that the U.S. is willing to assist its allies in-need with an affordable and reliable fuel source.
So there’s an example of a good thing we can do to really hit Russia where it hurts – all while buoying U.S. businesses and the American economy in the process. Russia is essentially a petrol state – much like Iran and Libya – with over half of the government’s spending derived from oil and natural gas revenue. Specifically, Russia is one of the largest natural gas producers in the world, second only to the United States. Eroding Russia’s natural gas export market could be one of the most effective ways to squeeze Putin.
But instead of focusing on the good things, which, in this case, also happen to be the “easy” things, this administration continues to veer down the wrong paths, often without the left hand knowing what the right hand is up to.
The lack of coordination across the various segments of the administration is becoming a problem. Right now, as the White House continues to search for a way forward on Russia, the administration’s own Securities and Exchange Commission (SEC) is actively debating whether it ought to impose sweeping new foreign payment disclosure rules on U.S.-listed oil and gas firms that state-owned giants like Gazprom wouldn’t need to follow.
As the editorial board of the Wall Street Journal wrote, “Some Senators who dislike fossil fuels—such as Maryland's Ben Cardin —are still hoping the SEC will turn the screws harder on American companies. These folks should have to explain how undermining U.S. competitiveness, and handing an advantage to the likes of Mr. Putin, is in anybody's interest.” Thankfully, SEC’s attempt to do just that last year was rejected by a federal court. But the agency is back at it again, and you can bet the folks in Moscow are paying very close attention to what it decides.
No one is saying the administration has a ton of great options available to it when it comes to dealing with an actor like Russia. But, among the options it does have at its disposal, it’s obvious that some of those are better than others. Is it too much to ask for the administration to start focusing on those? And not the ones that end up harming us more than the country we’re supposed to be targeting?
Carter did the same thing. He was Rockefeller’s boy.
How do you build a gas pipe line from Texas/Louisiana to Europe, huh???
The Qataris have doing it, using American and British technology, for decades.
Get in the game.
Makes sense for the Comrade-In-Chief’s administration. I will no longer give him the honor of being in control because he is just the mouth and pen.
I was in that business for 30+ years with Danish Esso’s tanker fleet!!!
If you are going to supply Europe instead of Russia with gas, how many vessels do you think it would take to replace Russia’s pipeline, huh???
Listen, I was in that business for 30+ years with Danish Esso’s tanker fleet!!!
How many vessels do you think it would take to replace Russia’s pipeline to supply Europe on a continuously daily basis , huh???
I suspected as much. Somebody used that gas, hence the delivery system was adequate for their purposes. So all you are arguing is cost and scale.
If you are going to supply Europe instead of Russia with gas, how many vessels do you think it would take to replace Russia’s pipeline, huh???
A lot. I had no doubt that it would be difficult when I posted that image, but I also knew when the Germans and Russians built that pipeline what a problem it would be. If I knew it, so did everybody else. They took that risk and now they must face the cost or lose much of their freedom. Were I them, I'd get hot with ordering a few small nuclear reactors with which to build a distributed electrical generating system (Toshiba makes a sweet little unit). In the mean time, they could probably go back to coal for a while, but no matter what, they'll need gas.
This situation with European dependency upon Russian gas is just a symptom of a much bigger problem. It was built, deliberately, by communist control freaks playing the global warming scam for all it was worth. It was built by corporate players and politicians seeking national advantages. We should all take the warning. Free markets, while very good at managing usual and smaller risks that have been commoditized (fires, floods, industrial accidents...), typically socialize the big risks (wars, blockades, massive natural disasters...). Hence, they lack preparation for even completely predictable events because of competitive forces when considering infrequent large scale events, particularly when that competition is among nations. Managing such risk by investing in national defense among other things is why we have governments with representatives willing to force all the players to take a hit on a daily basis with which to account for the risk of an eventual catastrophe. This is just as true of protection against importation of exotic species as it is military preparation, earthquakes, maintaining alternative suppliers, or safety stocks of critical strategic materials. Yet the entire industrialized world is headed the other way, the best example being the way the entire EU has blown off national defense.
Look at JIT manufacturing and distribution. Inventory has become everybody's enemy, money that is supposedly not producing anything at the moment, not because it isn't valuable but because that risk is not accounted in daily trading. Yet with that trend comes a risk of an interruption in supply. Nations used to stock food sufficient for over a year. No more. Enviros scream to get rid of gravity stored water. Our electrical grid runs on the edges. Information systems allocate goods so perfectly nobody is lacking... today, this minute. Meanwhile that risk of catastrophe grows and the pinprick to instigate it becomes ever smaller.
So please don't tell me that such is impossible or unaffordable. It was up to them to secure alternative suppliers and modalities and they didn't do it. Instead they socialized risks when they built the EU, simply making that risk "unthinkable" and babbling kumbayah to make themselves feel better while they footed the welfare state and told a pack of lies about the risks to stay in power. It may be a "better use of capital" right this minute, but not once the risks are accounted. Unfortunately, it's easy for politicians or businesspeople to discount those risks in a competitive world. Liberty costs money just as it frees us to produce wealth.
I was NOT talking about affordability but ONLY practicability. Even with the whole world’s fleet of LPGs, I don’t think they could meet the demands. If it could then the affordability would be lost, ship-owners’ freight rate would sky rocket.
Putin is far smarter than given credit for, he’s learned what Capitalism really is, and using it as a win-win situation for the Russian economy and Europe’s willingness to buy from him.
Soebarkah is getting a Pinocchio nose every day. In Syria particular as well as now in Iraq. And they have been very, VERY quietly lately talking about MH17. Apparently Putin has the pudding of different proofs out from the oven.
The Cairo speech has set the whole middle east on fire and total chaos!!! And it possible will be the same here in a not to distant future???
I have no doubt of that. Is freedom worth building a fleet?
If it could then the affordability would be lost, ship-owners’ freight rate would sky rocket.
Until more ships were built.
Putin is far smarter than given credit for, he’s learned what Capitalism really is, and using it as a win-win situation for the Russian economy and Europe’s willingness to buy from him.
Building a war machine requires a cash flow. Reagan killed that cash flow by deregulating oil here in the US. Hence the "collapse" of the Soviet Union.
I wish to add that because of the demand inelasticity in energy markets, it would not take that much marginal production and delivery to reduce Mr. Putin’s leverage significantly. One does not have to replace the entire supply to impact Russian revenues drastically.
I believe that was before their gas exploration
I have been loading OIL in former USSR ports, Batumi and Odessa, in the 50-60ties with very primitive installations during the hard liner's ruling.
No, that was before they were selling it. The gas found with the oil but they flamed it off as we once did. They did not have the pipeline infrastructure we do. The region suffered badly from lack of investment until Azerbaijani independence.
Who are we to believe, the Kenyan administration = NWO = Socialists. Or Putin = Capitalist(???) = anti-Rothschild NWO???
Very interesting that Putin has warned us: “Keeping your guns, Americans”!!!
This is ridiculous.
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