Monday, December 04, 2006 4:38:02 AM
I had a laugh on Friday when one astute commentator said OPEC was a sham for the gullible to allow Saudi Arabia to control the price of oil while appearing to be politically correct. In practice Saudi is the only OPEC country with any material surplus production and it has always fallen to Saudi to make the harsh moves when the situation demanded. Saudi nearly single handedly bankrupted Russia in the 1990s by flooding the market with oil at a time when Russia needed high prices to fund further development. Their tactics cost Russia 10 years before they could recover from that blow. Russia has significant amounts of oil but the lost decade prevented them from being able to use that oil to grab a larger share of the global market. Now 15 years later much of Russia's capacity has been used up and oil they could have used to fund development 15 years ago is needed to cover production from declining fields. In short Saudi stole their thunder at a time it would have mattered and Russia has never been able to regain that position.
NATO has warned Europe that Russia may be planning on forming an OPEC like cartel for natural gas and LNG. Russia's state owned entity Gazprom controls 25% of the world's supply of natural gas and wants to be the LNG exporter to the world. That is all we need another unfriendly world power selling us life giving supplies of natural gas that can be turned off in a heartbeat like they did to the Ukraine last year. It would be the equivalent of being a patient in ICU with OPEC responsible for our oil IV while GPEC led by Russia responsible for our oxygen/gas mask. You may be laughing but that is exactly where we are heading. Gas supplies in North America have already peaked so we cannot save ourselves.
Know how to make God laugh?
Tell Her your plans ....
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