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The Good, the Bad, and the Oil

January 3, 2006 12:29 PM

So, let's see. This morning Gazprom was squealing like a stuck pig over its contention that Ukraine had diverted gas shipments routed to other countries, leading to significant shortfalls in deliveries. Soon after, Russia agreed to resume discussions with Ukraine in the dispute. By evening, Gazprom was swearing up and down that they have "completed work" that will enable everyone to receive the full gas allotment tomorrow -- but not Ukraine, which is still under embargo. Meanwhile, gas prices climbed above $63 a barrel.

So what kind of "work" was "completed"? Well, unless Russia built a brand new pipeline through the Baltic Sea in the last day or two, the developments indicate that we are waiting for Putin to come up with a face-saving way to fold his hand. I'll let this fellow Bill O'Grady explain:

``We're up in part because of the tragi-comic events occurring between Russia and Ukraine,'' said Bill O'Grady, an analyst with A.G. Edwards & Sons in St. Louis. ``If there are persistent natural gas shortages, the way you address the situation is burning alternate fuels. The bigger problem is that perhaps Russia is not a dependable energy supplier.'' [Emphasis mine]

Bingo.

The question before Russia is quite simple: Can it meet its obligations or not? Before this showdown with Ukraine, the answer was an unqualified yes. The spat with Ukraine, however, has revealed two ominous portents in Russia's energy situation, both of them stemming from Putin's nationalization efforts. First, the stalemate indicates that supply contracts will only mean something until Putin says they don't. So, then, what value are the supply contracts that everyone is holding? At the same time, the stalemate has shown the cynicism with which Putin plans to wield his government's new industrial controls. Western governments will gladly buy gas from Russia, but only so long as the transaction terms are limited to cash-and-carry. If the price of delivery includes bending to Russia's will, many governments will seek alternatives -- either in other, less risky suppliers, or in technologies such as nuclear power. Politicians like to stabilize energy supplies, after all, because disruptions lead to political instability.

UPDATE: As predicted. Gazprom was going to have to settle for something far short of what it was demanding, and Putin needed to save face. What we've got, basically, is a modified version of what Yushchenko has been proposing all along: a gradual phase-in of market pricing. The question now is whether Putin's maneuvers have already sown doubt in European capitals about Russia's reliability as a supplier.

Russia | Ukraine | Ukraine

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Comments

Kofi Annan has stepped down at the U.N. - at least a decade too late. I predict future historians will find it difficult to judge whether this ineffectual dupe was the puppet of genocidal regimes and autocrats or just their indispensable enabler. It is tough to fully enumerate the sins and consequences of this repugnant figure, but this WSJ editorial begins the grim task.

December 17, 2006 05:59 AM · Permalink

I am often asked what it's like living in Ukraine. Well, yesterday afternoon I heard some hammering, and it sounded pretty close, so I went to se what was up. Looking out from a living room window I found two men in a cherry-picker, and they were hacking away at the rim of my balcony with sledge mallets, breaking away the concrete and tearing up the tiles. I figured the owner of my apartment must have forgotten to tell me she was having work done. Today I found out this wasn't the case. Alarmed, she phoned the Zhek - the state agency responsible for, but rarely inclined to undertake, the upkeep of public property. Their response was basically, News to us. We are now facing the prospect that we may never learn who these men were and why they were attacking my balcony, which now needs extensive repairs. It is not beyond the realm of possibility that I have been victimized in an act of serial vandalism by two men with sledges and a cherry-picker. That, my friends, is what it's like to live in Ukraine.

November 15, 2006 04:23 PM · Permalink

Help, I'm on crack!

Oops - I mean, Help, I've been hacked! Not sure how long it was there, but someone managed to place an unauthorized link in Ethanistan. If anyone clicked on it, I apologize for not catching it sooner. Unless it linked to something cool. In which case, I'm glad I could open your mind to new exotic experiences, man.

August 23, 2006 12:05 PM · Permalink

REVEALER, REVEAL THYSELF

Hmmmm. You can read through the entirety of Tony Judt's defense of the Mearsheimer/Walt paper without ever learning that Judt has called for the dissolution of Israel. Yet it's a not-unreasonable assumption that this argument, which was (of course) very controversial when it was aired, was what led the Times to Judt's doorstep in the first place. Bad copy editing?

April 19, 2006 08:29 AM · Permalink

Blair: Contra the "Doctrine of Benign Inactivity"

Britain being home to some of earth's most cynical and repugnant twits -- George Galloway and Harold Pinter, to name just two -- it is easy sometimes to forget the heroic moral fortitude its leaders have demonstrated at critical moments across history. Tony Blair reminds us why he deserves mention alongside Churchill and Thatcher.

March 22, 2006 10:08 AM · Permalink

Greg Gutfeld answers one of the blogosphere's great quandaries: How do you even begin to satirize a Web site that presents Alec Baldwin, Deepak Chopra and other B-list dinner guests as deep thinkers? It's the funniest thing in cyberspace at the moment. Don't miss Greg's "bio" -- and definitely do not miss the comments left below his entries by HuffPosters, confused and angry, who came for the wisdom of Cindy Sheehan and got rabbit-punched by this smartass.

March 1, 2006 10:58 AM · Permalink

A true gentleman of the Blogosphere has learned he must battle more than just Moonbats in the months and years to come. Stop by GM's Corner and give George a shout -- and maybe leave some change in the bowl on the way out.

February 16, 2006 05:29 AM · Permalink

Fight Fascism - Eat a Butter Cookie. Wikipedia provides a handy list of Danish companies here. Hey, if all of us here band together and buy Danish that would be like ... four or five bucks. But it's the principle that counts!

February 9, 2006 08:13 PM · Permalink

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