Interesting item in the Gulf Newsthat illustrates the extent to which not all is as it seems in theRussia-Ukraine gas dispute. Specifically, the ways in which the pricedispute masks the impending collapse of natural gas prices, at a timewhen Gazprom desperately needs cash to invest in infrastructureupgrades.
Also this (which ought to, but probably won’t, takea couple point-sizes off the screaming headlines about Gazprom’sinhuman decision to shut the tap on downstream customers last week):
Halfwaythrough the heating season, Europe’s natural-gas stockpiles are aboutthe same as a year ago. Inventories at Europe’s seven biggest tradinghubs were 38.6 million cubic metres on January 5, or 74 per cent full,compared with 73 per cent a year ago. Five of those were 99 per centfull by early November.
Tough sledding for theBalkan states, perhaps, but the whole thing goes to show howinextricably the gas pipeline and information pipeline are interwoven.
Thegood news for Europe and the U.S., beyond the mid-term prospects forcheaper natural gas, is that should President-elect Obama manage toimprove relations with Iran, the balance of power in the Europeanenergy security standoff is likely to shift even more in Europe’sfavor. (Despite the hysteria, Gazprom’s dicey supply and infrastructurepicture make it prettyvulnerable and dependent on Europe as a customer/financer in the samewaysEurope is on Gazprom as a supplier.)
The least-commented of theBush administration’s major grand strategy miscalculations, in myestimation, was the effort to contain both Russia and Iran at the sametime. It was probably based on Y2K logic that, by the time oil waspushing $160/barrel, had lost its sheen. But taking as a hypotheticalthe scenario whereby the U.S. responded favorably to Iran’s 2002overtures and was able to make some concrete progress on them, we couldbe looking at a situation today whereby Georgia and Ukraine would haveto make their case for NATO membership on the merits, with the Nabuccopipeline — pumping Iranian natural gas — providing Europe with analternative to Gazprom.
Alternatively, had we slowed the NATOstampede to Russia’s borders and found a compromise solution toEuropean missile defense (if it was really necessary), we could also belooking at a situation where Iran was feeling meaningful pressure onits nuclear program (although the destabilization of Iraq would stillhave unlocked its regional ambitions).
Obama has signaled aninterest in improving relations with both countries, at a time whenlower energy prices and the financial squeeze have begun to roll backthe Bush administration’s assiduous efforts to strengthen theirbargaining positions. Small consolation, since not a whole lot else isbreaking Obama’s way as he prepares to take the reins. But consolation,nonetheless.