An American Lion

Natural Gas and Oil Transmission Systems, Western Europe

If you follow commodities, and how they interact with geopolitics, this would appear to be right up your alley:

The world faces a natural gas glut that will cool prices, says the International Energy Agency, raising the prospect that Russia’s grip over Europe’s energy security will loosen.

In a draft version of its World Energy Outlook (WEO), to be published next Tuesday, the rich countries’ energy watchdog says that “global gas markets have evolved from a seller’s market, driven by tight supply and demand, to a buyer’s market as demand weakens while new supply comes on stream”.

The oversupply of gas will be even greater if countries push ahead with plans to save energy and develop more renewable electricity and nuclear power.

In the report, the IEA expects overcapacity of gas pipelines and liquefied natural gas terminals to reach at least 250bn cubic metres by 2015, more than four times the spare capacity in 2007. For the US, the gas glut will force companies to scrap plans for new LNG import terminals and mean that much of its existing capacity will be underused.

“Projected global demand points to significant under utilisation of inter-regional pipeline and LNG capacity around the world. This looming glut could have far-reaching effects on gas pricing,” the draft states.

Doing the right thing cripples someone else’s industry, you see. Using less natural gas, and using just enough less of it, causes a price drop. That drop in revenue can drive a nation’s state-owned or state-confiscated industry to the brink. In the case of Russia, what little influence it has over Ukraine and thus the rest of Europe, wanes significantly if they don’t need as much of Russia’s natural gas or oil. Anything that cuts into those revenues could cripple the already shaky Russian economy, and stop expansion or improvement of infrastructure.

As much as people will decry this sentiment, this is why I think any “greening” of our situation, energy-wise, has to be gradual and the moves telegraphed around the world. Now would be a good time to rethink oil producing or transmission infrastructure.