Streetwise Professor

January 17, 2012

Russia, Chutzpah is Thy Name

Filed under: Economics,Energy,Military,Politics,Russia — The Professor @ 11:20 am

Russia claims that the United States is stoking unrest in the Middle East, and in Iran in particular–in order to make drilling for shale oil economically viable (h/t Renee).  Seriously:

The US is deliberately aggravating the situation around the Iranian nuclear program. According to Russian experts, the conflict’s escalation will help the US to make the production of “difficult” hydrocarbons such as shale oil and gas cost efficient. The multibillion program on the development of shale gas production approved in the US authorities can be implemented only in conditions of high oil prices.  And if Iran in response to Washington’s recent actions blocks the Strait of Hormuz this problem will be resolved by itself, analysts note.

. . . .

“Over the last decades the US has been actively developing shale gas production. Then the US companies started to develop shale oil production.  In the US it is almost a nationwide project implying creation of more than 1 million of working places. Shale oil and gas production implies almost permanent drilling of new wells because after one year a well is no longer operational. It is very expensive and to make this project cost efficient oil should cost not less than $100 per barrel. In reality the US needs Iran to close the Strait of Hormuz through which shipments of Middle Eastern oil and gas are carried out. This would lead to a great deficit.”

. . . .

Experts point at one more aspect of using the Iranian factor for the benefits of the shale oil project. Until recently the US ecologists have been pointing at catastrophic consequences the mass development of shale deposits may lead to. The wells are located deep underground in porous fields.  In order to prevent their disintegration the oil producers pump in mixture of water and chemical substances there, a professor Alexei Yablokov says:

“The production of shale gas may provoke earthquakes. Another problem is contamination of ground waters, which may spread quite far. There have been constant disputes in America whether to allow such production in the state of New York and states.”*

Talk about an inversion of the truth.  As a large consumer of energy, and a net importer, the US does not benefit as a whole from higher oil prices–even though there are some that do.   Like the 400,000 people in North Dakota.  Thus, contrary to the assertion, it is risible to argue that the US would stoke conflict with Iran to benefit . . . North Dakota.

Moreover, as a large exporter that is dependent on high oil prices to fund the government and generate the rents that its governing elites siphon off, Russia, and those who rule it, definitely have an interest in high oil prices.  Russia is the main beneficiary of unrest in the Middle East.  I pointed this out years ago, as have many others.  It clearly has an interest in fomenting conflict, and its actions in the Middle East are clearly consistent with this interest.  Indeed, its actions vis a vis Iran–including its support for Iran’s nuclear program, and its running diplomatic interference for IRI (especially at the UN)–make perfect sense from this perspective.

Russia has every incentive to keep the pot boiling in the Straits of Hormuz–but not to the point of boiling over.  That’s a very dangerous game to play.

American options in Iran are limited, and there are many risks involved.  There are many conflicting goals.  But one thing I can say categorically is that fomenting tension to keep the price of oil high is not one of them.  That is adverse to American interests.  (I also consider it ironic that with respect to Libya and Iraq, Russia and other anti-American voices–including some American ones–claimed that our policy was driven by the desire to get our hands on cheap oil.  So which is it?)

No, fomenting tension to keep up oil prices is Russia’s job.  It benefits economically from this.  It also benefits from having the US tied up in another conflict–or potential conflict.

But as with the farcical assertions regarding Phobos-Grunt (see the immediately preceding post), this type of agitprop is an indication of what we can expect out of the next Putin administration.  Not even Obama will be able to claim with a straight face that the Reset is only resting.  It will be dead, dead, dead.  Well, it is already, but its demise will be undeniable.

*To illustrate the article’s tenuous grip on reality, it states: “In New York and Texas the authorities finally banned shale hydrocarbons production.”  That’s news in Texas.  And in NY too, for the fracking ban was lifted–though very tough restrictions remain in place.

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  1. Russia thrives on conspiracy theories and deeds being the perpetrator of most of them. Thugs.

    Comment by voroBey — January 17, 2012 @ 1:16 pm

  2. Mikhail Leontiev is Chief Pundit of All Russia. He gets more Channel 1 prime time than anyone. Anyway, for the last couple of years he’s been prophesying the coming of Shale and the end of oil geopolitics as we know it.

    Comment by So? — January 17, 2012 @ 3:49 pm

  3. It’s really kind of scary how neo-Soviet this is, isn’t it?

    Comment by La Russophobe — January 17, 2012 @ 6:17 pm

  4. It’s a stupid statement for whoever wrote that article, but not as stupid as expecting the Kremlins to keep buying Treasuries while you’re busy overthrowing every government in sight:

    And vorobey, when is SWP going to ban you for calling for the illegal detainment of American citizens for thoughtcrime?

    Comment by Mr. X — January 18, 2012 @ 3:54 pm

  5. Mr. stupid X, you are definitely confusing me with someone. But whatever. The more I try reading your comments, the more I see how miserable you are, helpless in your vile efforts to offend everyone who doesn’t agree with you. I feel sorry for you.

    Comment by voroBey — January 18, 2012 @ 4:17 pm

  6. Here is just one example of what the shale gas revolution means for the US and the free world -Not for the Russian Mafia agent MR X:

    The stats on domestic natural gas are also eye-opening. Recoverable natural gas in North America is estimated at 4.2 quadrillion — or 4,244 trillion — cubic feet. At the current rate of consumption, that’s enough natural gas to power North America for the next 175 years. And it means that our continent has more robust gas reserves than Russia, Iran, Qatar, Saudi Arabia, and Turkmenistan — combined. Roughly 272.5 trillion cubic feet of that total are in the United States. …

    Comment by Anders — January 18, 2012 @ 7:05 pm

  7. Anders, I’ll let former USAF spec ops pilot John Robb reply to you. Since you can’t get it through your stubborn and allegedly Nordic skull that I’m an American logging in from a U.S. IP (ask SWP), read him instead:

    The Heartbeat of War with Iran

    A war with Iran has three drivers:

    It is building a nuclear weapon. The Israeli security lobby is going nuts. [Equis comment: if Iran’s reactors get blown to bits but the regime is left intact, they will simply throw a half billion or more at the Norks and buy a missile-capable nuke — no way to stop such a transfer without a second Korean War]

    Iran is sitting on top of the world’s 2nd largest reserves of natural gas (behind Russia). Given how important natural gas is to future global energy needs and the need to hedge Russia’s control over the global market, this can’t be allowed. [Again, could be a flawed premise, but you’ll notice the sacred Nabucco (Nebuchadnezzer! Read your Old Testament) pipeline project was rolled out before the U.S.-led invasion of Iraq, despite insurgents blowing up the pipelines and things not going according to plan with Iraqi gas supplying the project if the Iranians and Turkomen couldn’t be persuaded to join in]

    The US defense industry needs a new way to drive spending now that bin Laden is dead. Iran is now at the top of the list (China/Cyberwarfare is next on the list). [SOPA, cough cough]

    With these drivers in place, all that is needed to is to remove barriers to a conflict.

    Comment by Mr. X — January 18, 2012 @ 8:16 pm


    Boo Golden Rule, boo Jesus in South Carolina.

    Comment by Mr. X — January 18, 2012 @ 8:20 pm

  9. BTW Mr. X, you are a liar and do try and offend people deliberately.

    Like your comment on another thread where you claim to respect Georgians fighting ability, while on a previous thread you claim they are all cowards and the US Marines praise of Georgian fighting ability you condemn as propaganda.

    Comment by Andrew — January 19, 2012 @ 6:48 am

  10. More Russian chutzpah:

    Russia threatens Syria resolution at UN
    Russia will block any move at the UN Security Council to impose sanctions on Syria or authorise the use of force, its foreign minister has said.

    Of course what can we expect from a country that mourned Kim Jong Il’s death as the loss of a heroic leader, while ignoring the death of Havel.

    Comment by Andrew — January 19, 2012 @ 9:21 am

  11. Maybe Russia is making its last Chuztpah stand with Iran, and looking in the rear view mirror of successful sabber-rattline. Twisting arms with gas availability is over. Fracking is already being deployed world-wide and China has more shale gas reservoirs than anyone. The price of natural Gas and Oil are already decoupled on a BTU basis, and Russia has no chance of using Gazprom for profits 5 years into the future. The world is oversupplied with gas today.

    George Friedman over at stratfor, thinks the world hinges on Iran, and the US will be making detente with Iran. Iran is biggest threat to US security, and Putin maybe more focused on losing his pride, than his gas profits. Imagine if a US-Iran coalition supplied fuel for Europe.

    Comment by scott — January 19, 2012 @ 1:30 pm

  12. scott, Friedman is one of the most dull, unoriginal thinkers out there, except for his book’s weird claims that Poland and Mexico will be world powers by 2050. But anyway, I suppose the greater Kingdom of Poland could be revived if Poles have babies while the Baltic states continue to implode demographically, but as it is, Poland is just treading water in population terms. Friedman got the ‘U.S. will make detente with Iran to screw Russia with cheaper oil/gas’ idea from old Z. Bzrezinski. Look it up.

    “Like your comment on another thread where you claim to respect Georgians fighting ability, while on a previous thread you claim they are all cowards and the US Marines praise of Georgian fighting ability you condemn as propaganda.” No Andy Dzughashvili, I merely pointed out that Georgians made a ‘business decision’ not to die for Misha the Tie Eater’s mistake after it became clear the Russians were not marching on Tblisi, when they had the capability to do so quite easily. And what are the Marines supposed to say, “These guys we trained and armed to the teeth got their asses handed to them?” Hell no.

    That is not cowardice (since I hope and pray the hooting soldiers shooting grenades into Ladas full of civilians caught on cellphone cams were a minority). This is good sense. No Andy, I praised Georgians fighting ability in World War Two.

    It’s not chutzpah on Russia’s part to block the neocons dreams of overthrowing Assad, and instead of that country suddenly becoming an oasis of freedom and love of Israel like we were promised with Iraq, it becomes either an Iranian or Muslim Brotherhood dominated hellhole that stones Syria’s beautiful Christian women for not wearing burkas and stockpiles rockets on the Golan Heights. Or are you really that naive Andy to believe that’s all about democracy and stopping human rights abuses, after the U.S. said nothing while Bhahrain disappeared hundreds if not thousands of Shi’a citizens?

    Comment by Mr. X — January 22, 2012 @ 11:30 pm

  13. No Goebbels X. You derided the Georgians combat performance in Afghanistan, where they have had the highest praise from the USMC.
    The USMC has criticized other allies for their poor performance in Afghanistan, but praise the Georgians, enough said.

    And do you know that the Russians reached the outskirts of Tbilisi, including raping and looting in the old capital of Mskheta?

    The main reason they did not drive into Tbilisi was the arrival of 4th Brigade with modern US equipment and training from Iraq, and the arrival of US naval assets in the black sea.

    Comment by Andrew — January 23, 2012 @ 1:17 am

  14. Oh and the film of “Georgian” soldiers firing grenades into cars from 08/08/08, I’ve seen it, looks more like Russians firing into chechen Lada’s, not to mention all the soldiers are yelling in Russian, guess you can’t tell the difference.

    Comment by Andrew — January 24, 2012 @ 1:33 am

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