Monday, February 19, 2018

The Oil Behind the Man Behind the Curtain

Meteorologist and journalist Eric Holthaus said on Twitter today,

There is no way to explain the rise of Trump or his administration's malignant connection to Russia without looking at the oil industry's desire to keep making profits at the expense of planetary well-being. Climate politics — and institutionalized climate denial — is perhaps the primary reason the world is at it is now. These people are so selfish and greedy for fossil fuel money that they put every single one of us — for dozens of generations into the future — in peril.
Holthaus tweeted that in the context of a recent Rex Tillerson interview about his ties with Vladimir Putin. Around the same time, someone else I follow (not sure who) retweeted a May 2017 thread by Alex Gilbert, an energy and climate policy analyst. Gilbert had this to say:
The political news the last two weeks was crazy and overwhelming. But finally a picture is emerging. It’s not pretty.

To start, its helpful to understand that what's happening in the U.S. is a result of international high politics. Some context: In the mid-2000s, growing global oil demand and stagnant supply led to oil prices spiking severely. Between 2007 and 2014, with oil prices usually above $100/barrel, oil exporters became over reliant on oil surpluses. In 2013, Russia exported more than $350 billion in oil and natural gas, more than 2/3 of total exports.

Meanwhile, the shale revolution began. From 2008-2015, U.S. oil and natural gas production exploded, increasing about 50%. Critically, the U.S. pushed fracking and liquid natural gas exports as a solution to Europe’s dependence on Russian fossil imports.

In 2014, an inflection point arose for oil: U.S. oversupply was evident and oil exporters were too dependent to cut production. In six months, oil futures dropped from >$110/barrel to barely $40/barrel. OPEC and Russian profits evaporated. While the effects were felt in all major petrostates, they were most acute in Russia due to exceptionally unfortunate timing.

In 2004, then Ukrainian Prime Minister Yanukovych had an election overturned due to fraud. Shortly after he turned to Paul Manafort. Over the next ten years Manafort helped rebuild Yanukovych’s pro-Russian party. Elected President in 2010 with support from ethnically Russian east Ukraine, Yanukovych led a corrupt regime. 2012 Parliamentary elections are now suspected of having significant electoral fraud (bribes to election officials have been identified). Current evidence now indicates Manafort directly benefited financially from that corruption

In late 2013, after years of negotiation and despite promises, Yanukovich decided not to join the European Union. Instead, he wanted to increase economic and security ties with Russia. Street protests erupted in Kiev (ethnically Ukrainian).
From there, I imagine Gilbert went on to describe the Russian invasion of Ukraine and the geopolitical dilemma that presented, but Twitter has cut off my access to this nine-month-old series of tweets.

But you get the idea of how this is all related to oil prices, and oil as an economic basis. And gives one idea of the kind of turmoil that we’ll see if we (when we) turn from an oil-based energy model to something that can sustain human civilization, as we must.

It ain't gonna be pretty.

No comments: