Tuesday, January 09, 2007

EU oil supplies threatened

The Times of London reports that Russians have turned off Europe's oil supply in a bitter dispute with Belarus. The scale of the problem can be seen in the volume of oil that will be affected.

"More than 1.2 million barrels of oil a day flow from Russia through the Druzhba, or Friendship, pipeline, providing almost a quarter of Germany’s needs and 96 per cent of Poland’s imports, as well as supplies to Ukraine, Hungary, Slovakia and the Czech Republic."

It's tempting to say "welcome to European socialism" where ineptness and criminality are on every side of the coin. Or tell them that looking on the bright side, with global warming they won't need a lot of Russian oil. The fact is that it's a problem that the EU can't resolve. They've made themselves economic satellites of Russia.

You'd think Germany would get a break since Gerhard Schröder, Merkels' chubby predecessor, is on the board of a German-Russian consortium constructing a gas pipeline linking Russian gasfields with Western Europe.

There's a gap, however, between the dream and reality. The pipeline won't be complete until 2010, however, and if it pursued in the same manner as every other socialist project, it'll be delayed 3 years, cost $90 billion more than predicted, and the cost overruns on bribes alone will set the citizens of the EU back another $100 billion or so.

I wish i could say I feel sorry for them. They had years of under-the-table deals with Iraq for cheap oil that meant bribes and lucrative construction contracts, but Russia isn't going to play the kinds of games with them they had going with Saddam.

It's payback time. Russia wants to buy into EU markets and not as a consumer, which explains the oblique reference to "persistent speculation that Gazprom, the Kremlin-controlled gas group, will seek to buy Centrica, the British Gas group, which has 16 million gas and electricity customers in the UK." The not-so-oblique answer is, yes, if they want oil this winter.

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