The Consequences of Procrastination

The Crimean situation demonstrates the unintended consequences of procrastination and policy driven by climate ideology.  Although the US and EU may impose biting sanctions on Russia for its invasion of the Ukraine, the economic and political consequences may be worse because of the repeated failure of the West to face up to the reality of a Russia controlled by Putin.

Russia has demonstrated by action that it will use energy as a political weapon to advance its political goals and discipline nations that annoy it.  In 2006 and 2009, it curtailed natural gas to the Ukraine as punishment for being a little too independent and the effects of that rippled through Western Europe.  The EU which depends on Russia for about 30% of its natural gas has talked and talked about the need for greater energy security but in fact pursued a policy of wishful thinking about Russia as a reliable trading partner and natural gas supplier. In part, this was due to too much attention to “green energy” and emissions from it own energy development.  The US has not used either its natural resources or global influence to promote greater energy security in Europe.

There is great clarity to hindsight but in the case of Europe’s dependence on Russia as its major supplier of natural gas, hindsight only reinforces what has been clear for almost two decades and certainly over the past decade.  It has taken the crisis in Crimea to get Europe to perhaps finally focus on its energy security problem.

Samuel Johnson once observed that there is nothing like a hanging to concentrate the mind.  Maybe the invasion of Crimea and the potential for further incursion into the Ukraine will concentrate the West’s mind.  The Caspian Sea holds tremendous reserves of oil and gas.  Discussion about a pipeline from Azerbaijan under the Caspian Sea has been under discussion for over a decade, with an apparent decision not being made until last year.  Progress on the pipeline has been hampered by a number of political problems involving countries in the Caspian region and those where it would run.  The problem has not been made easier by a reluctance of the USG to be more involved and to allow US companies to provide economic and technical assistance.  This is a reaction to an embargo by Azerbaijan against Armenia invasion in 1990.  Although there has been a cease-fire for 20 years, the dispute between the two countries has not been settled.  As a result, the US government has been reluctant to take actions that might offend the Armenian lobby.

The decision on the best route for the pipeline from the Caspian Sea was made last year and it is estimated that gas will reach Europe in 2019.  If that decision had been made shortly after the first interruption of gas to the Ukraine in 2006, the dependence on Russia would be less.  Europe also has great reserves of shale gas which it has been reluctant to develop.

If the Obama Administration had not been slow walking LNG exports, facilities on the Gulf Coast might be a reality or at least closer to completion.  There also wouldn’t be a backlog of applications sitting in DOE.  The ability to export natural gas to Europe might not have prevented the Crimean invasion but it would impact Putin’s calculus of his next steps.

For too many years, talk about energy security has been just that,talk.  The Crimean Crisis should be the catalyst for meaningful action here and in Europe.  For the US that should begin with approving the Keystone Pipeline and making more federal lands, including the OCS, available for oil and gas production.  While we can do a lot to promote our own energy security, we can aide the EU if it is finally willing to act on its own behalf, which includes development of its shale gas on an expeditious basis.

Acting will involve costs because Mr. Putin will probably retaliate economically as well.  Whatever those costs, they will be greater than they would have been a decade ago but less than they will be in the future if no action is taken.

 

This article appeared on the FuelFix weblog at http://fuelfix.com/blog/2014/03/17/the-consequences-of-procrastination/

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