The Edmond Sun

Opinion

January 23, 2014

Russia’s energy market is running on fumes

EDMOND — Russian president Vladmir Putin has won some begrudging admiration for his strategic triumph during the Syria crisis. Let him have his moment. It won’t last long. A new development threatens to rob Putin of a significant part of his international heft.

That development, of course, is America’s energy revolution.

By ExxonMobil’s estimates, natural gas is on track to becoming the second-largest energy source in the world by 2025, outpacing even coal. And the United States just became the biggest natural gas producer on the globe, overtaking — you guessed it — Russia.

While the United States will benefit economically, politically and diplomatically from this energy revolution, Russia will come out the biggest loser.

Start with simple economics. As much as 40 percent of Russia’s economy is dependent on its oil and gas sales. According to some experts, the U.S. shale boom could undermine this source of growth, causing Russian oil exports to plummet by as much as 25 percent over the next several years as other nations embrace the American energy alternative.

There’s a political factor at play, too. The post-Soviet government has sought a social contract that goes something like this: The Kremlin will ensure economic stability, just so long as the citizenry kindly stays out of politics. But building political legitimacy on economic progress can be an awfully risky endeavor, as Putin soon will learn.

And while it’s possible that Russia may have untapped natural gas resources, the country is not competitive in developing them — nor is it likely to be. Russia’s political class is heavily entrenched in its business sector, which is as corrupt as Siberia is cold. Efficiency isn’t the country’s strong suit. Don’t expect any new infrastructure to be built without the Kremlin’s friends siphoning off a bit of cash first.

Russia’s Soviet-era energy infrastructure is aging, and was of questionable quality even when it was first erected. There’s reason to believe Russia is already performing at capacity, adding further questions to its competitive potential.

In 2007, when TIME named Putin its Man of the Year, two of its correspondents remarked to the man himself that he “must feel lucky that the price of oil is so high.”

“Fools are lucky,” Putin responded. “We work day and night!” And yet, a savvy observer might note, Russia continues to fall behind in the energy-export race.

And keep in mind that the United States is beating Russia on price, too. The price of American natural gas is about a third of Russia’s. International buyers are catching on. Where Russian gas giant Gazprom once fulfilled the orders for 37 percent of Europe’s natural gas supply, it now sells only 25 percent.

This extra competition is internationally disruptive. The Kremlin long has used its near-monopoly in the energy sector as a tool to assert its global power.

For example, in 2006 and 2009, Russia tried to strong-arm Ukraine by shutting off its gas supplies, leading to energy shortages across Europe. Putin used this geopolitical move to underscore his influence throughout the region, winning diplomatic points at the expense of Europe’s shivering families that winter. Russia’s move was retaliation against the Ukrainian government, which has been leaning westward since the Orange Revolution.

Likewise, Russia has used energy prices to try to control its neighbors. After the 2003 Rose Revolution, Georgia too began to orient its foreign policy toward the West and away from Russia. The Kremlin promptly responded by announcing significant price increases for gas.

However, despite this move, Georgia has been able to supplant its supply somewhat, thanks to its neighbor Azerbaijan. This alternative has given the local government confidence to hold firm against Russian pressure.

These are just two examples among many demonstrating how Russia’s energy policy supports — and sometimes drives — its foreign policy.

But as the global energy equation tilts toward the United States, Russia’s influence and international leverage diminishes. The United States must continue to develop its natural gas supply. The benefits redound far beyond the domestic sphere.

CHRIS FAULKNER is president and chief executive officer of Breitling Oil and Gas.

1
Text Only
Opinion
  • Healthier and Wealthier? Not in Oklahoma

    Increased copays, decreased coverage, diminished health care access, reduced provider budgets and increased frustration are all the outcomes of the Legislature’s 2014 health care funding decisions. Unlike some years in the past when a languishing state economy forced legislators into making cuts, the undesirable outcomes this year could easily have been avoided.

    July 26, 2014

  • Medicaid reform a necessity

    Historically, education spending by the state of Oklahoma has been the largest budget item. This is no longer the case. In recent years, the state of Oklahoma spends more on Medicaid (operated by the Oklahoma Health Care Authority) than common education and higher education combined, according to the state’s Comprehensive Annual Financial Report.

    July 25, 2014

  • Remembering lessons from 1974

    This week marks the 40th anniversary of an important milestone in America’s constitutional history. On July 24, 1974, the Supreme Court voted 8-0 to order the Nixon White House to turn over audiotapes that would prove the president and his close aides were guilty of criminal violations. This ruling established with crystal clarity that the executive branch could not hide behind the shield of executive privilege to protect itself from the consequences of illegal behavior. It was a triumph for the continued vitality of our constitutional form of government.

    July 25, 2014

  • RedBlueAmerica: Is parenting being criminalized in America?

    Debra Harrell was arrested recently after the McDonald’s employee let her daughter spend the day playing in a nearby park while she worked her shift. The South Carolina woman says her daughter had a cell phone in case of danger, and critics say that children once were given the independence to spend a few unsupervised hours in a park.
    Is it a crime to parent “free-range” kids? Does Harrell deserve her problems? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, debate the issue.

    July 24, 2014

  • Technology that will stimulate journalism’s future is now here

    To say technology has changed the newspaper media industry is understating the obvious. While much discussion focuses on how we read the news, technology is changing the way we report the news. The image of a reporter showing up to a scene with a pen and a pad is iconic but lost to the vestiges of time.
    I am asked frequently about the future of newspapers and, in particular, what does a successful future look like. For journalists, to be successful is to command multiple technologies and share news with readers in new and exciting ways.

    July 23, 2014

  • New Orleans features its own “Running of the Bulls”

    On July12, the streets of the Warehouse District of New Orleans were filled with thousands of young men who were seeking to avoid being hit with plastic bats wielded by women on roller skates as part of the annual “Running of the Bulls” that takes place in New Orleans.
    The event is based on the “Running of the Bulls” that occurs in Pamplona, Spain, that is  part of an annual occurrence in which a group of bulls rampage through the streets of Pamplona while men run from them to avoid being gored by their sharp horns. That event was introduced to the English-speaking world by Ernest Hemingway, who included scenes from it in his critically acclaimed 1926 novel “The Sun also Rises.”

    July 22, 2014

  • OTHER VIEW: Newsday: Lapses on deadly diseases demand explanation

    When we heard that the federal Centers for Disease Control and Prevention had created a potentially lethal safety risk by improperly sending deadly pathogens — like anthrax — to other laboratories around the country, our first reaction was disbelief.

    July 22, 2014

  • Holding government accountable for open meeting violations

    A few weeks ago I wrote about the recent success of three important government transparency proposals which will go into law this year.

    July 21, 2014

  • GUEST OPINION — Oklahoma GOP voters want educational choices

    A Braun Research survey released in January showed that Oklahoma voters — Republicans, Democrats, and Independents alike — favor parental choice in education.

    July 21, 2014

  • HEY HINK: IRS interferes with citizens’ rights of free speech

    The patient is gravely ill. We have detected traces of a deadly venom in the bloodstream. We don’t know how widespread the poison is, but we know, if not counteracted, toxins of this kind can rot the patient’s vital organs and could ultimately prove fatal.

    July 19, 2014

Poll

If the Republican runoff for the 5th District congressional seat were today, which candidate would you vote for?

Patrice Douglas
Steve Russell
Undecided
     View Results