Free Markets, Free People

Crimea

Europe discovers its gas problem

German Chancellor Angela Merkel has declared the G8 to be dead, thanks to Russia’s take over of the Crimea:

German Chancellor Angela Merkel declared the Group of Eight leading nations defunct given the current crisis in Ukraine, in a clear message to Russia that the world’s seven other major industrialized countries consider its actions in Ukraine unacceptable. “As long as there is no political environment for such an important political format as the G-8, the G-8 doesn’t exist anymore, not the summit nor the format,” said Ms. Merkel, in Germany’s parliament, the Bundestag. “Russia is widely isolated in all international organizations,” the chancellor said.

Ah, yes, the old “isolated in all international organizations” gambit.  And what have all the “international organizations” done in reaction to Russia’s Crimean takeover?  About what they did when Russia pushed into Georgia.  A whole lot of nothing. It is one thing to have international organizations that have teeth and are willing to do something in reaction to such a blatant act.  But when they mostly issue statements condeming the action and void the Netflix accounts of certain Russian officals, being isolated from those organizations isn’t such a big deal.  All it does is make further diplomatic efforts more difficult, not that it is clear that Russia is open to diplomatic overtures.

Another thing that is happening is Europe is discovering it has managed to put itself in an energy situation that isn’t at all to its advantage.  30% of Europe’s natural gas flows through Russian pipelines (Germany gets 40% of its natural gas supplies from Russia).

So the scramble is purportedly on to change that situation.

European leaders will seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels on Thursday and Friday, while stopping short of severing energy ties with Moscow for now. EU officials said the current Ukraine crisis had convinced many in Europe that Russia was no longer reliable and the political will to end its supply dominance had never been greater. “Everyone recognises a major change of pace is needed on the part of the European Union,” one EU official said on condition of anonymity. As alternatives to imported gas, the Brussels talks will debate the European Union’s “indigenous supplies”, which include renewable energy and shale gas.

Now, one would think that such a situation would call for drastic and speedy action.  Anyone want to bet how long they dither and, should they decide to exploit their “indigenous supplies”, how onerous the rules and regulations will be?

When leaders of the European Union’s member states meet today and tomorrow (20-21 March) in Brussels, they hope to reach consensus on the EU’s long-term climate goals. But agreement appears unlikely because of deep divisions between east and west. Ahead of the summit, ministers from 13 member states signed a declaration supporting a European Commission proposal for an EU commitment to reduce carbon dioxide emissions by 40% from 1990 levels by 2030 – up from a 20% target set for 2020. This ‘green growth group’ includes France, Germany, Italy and the UK. But Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia are wary of the target and the timeline, and are resisting any such commitment.

The latter group will most likely be all for moving ahead as speedily as possible to exploit “indigenous supplies”.  They’ll meet some pretty stiff headwinds, apparently, from the Western EU nations. You can almost see this train wreck coming.

Meanwhile in the pursuit of “green energy”, Europe is apparently ready to toss in the towel:

Governments across Europe, regretting the over-generous deals doled out to the renewable energy sector, have begun reneging on them. To slow ruinous power bills hikes, governments are unilaterally rewriting contracts and clawing back unseemly profits.

You have to laugh.  “Unseemly profits”?  They’re subsidies, sir.  Not profit.

It’ll be interesting to see if the EU has the will to sort this all out in the next couple of days.  If one is a betting person, you’d have to guess that the odds for success are long, given the EU’s recent history.

~McQ

Thomas Friedman: “You know how you beat Putin? Tax Americans, that’s how.”

Ah the left, you can count on them to come up with some way to get into your wallet in answer to any crisis.  Thomas Friedman, the man who admires China’s abilty to control almost all aspects of its citizens life, has a great solution to the recent aggression by Russia’s President Vladimir Putin.  Tax Americans:

I don’t want to go to war with Putin, but it is time we expose his real weakness and our real strength. That, though, requires a long-term strategy — not just fulminating on “Meet the Press.” It requires going after the twin pillars of his regime: oil and gas. Just as the oil glut of the 1980s, partly engineered by the Saudis, brought down global oil prices to a level that helped collapse Soviet Communism, we could do the same today to Putinism by putting the right long-term policies in place. That is by investing in the facilities to liquefy and export our natural gas bounty (provided it is extracted at the highest environmental standards) and making Europe, which gets 30 percent of its gas from Russia, more dependent on us instead. I’d also raise our gasoline tax, put in place a carbon tax and a national renewable energy portfolio standard — all of which would also help lower the global oil price (and make us stronger, with cleaner air, less oil dependence and more innovation).

Of course one of the real problems to doing what Friedman wants, i.e. exploiting our “natural gas bounty” is found in the parenthetic statement right after that.  Government and environmentalists stand in the way because “the highest environmental standards” is a moveable goal post that is pushed further and further out each time industry approaches it.  And, of course, Friedman apparently isn’t cognizant of the fact that the “standards” are one of the major cost factors in keeping prices up.

Naturally Friedman also wants the other lefty dream.  The Crimea is as good of an excuse as any.  The Global Warming scam has been exposed.  The chances of getting that carbon tax based in that nonsense seem ever more remote.  But wait, we now have the Crimea!  Perfect.  Lets tax ourselves to do in Putin.  Friedman knows that whatever the excuse, taxes are rarely dropped after they’re once implemented.  So, with a “whatever it takes” philosophy guiding this, Friedman has his newest and latest excuse to raise taxes.  And note – it’s a long term strategy (which apparently assumes that Russia won’t make adjustments to the threat to its business) which means that these aren’t temporary taxes we’re talking about.  No.  Not by any stretch.

Oh, and for a guy who is so in love with China, I wonder if he has any idea where Russian oil and gas would go if the EU decided to buy from us?

Yeah, probably not.

~McQ