Energy as a weapon

There were a couple articles I stumbled across in the last week that piqued my interest, and involve two countries who are or were among our biggest enemies. But both have some long-term ramifications for us and our Western allies.

The first article was about the China National Offshore Oil Corporation (CNOOC), more specifically a publicly traded subsidiary that wanted additional rights to purchase overseas assets and compete with its non-public parent company. While it sounds like just another international business deal gone sour, bear in mind that CNOOC was the company who offered over $18 billion to buy out Unocal and enter the United States gasoline market. (After heavy political opposition here, Chevron eventually bought Unocal.)If the deal had gone through though, all the Union 76 stations in the country (there weren't many but they existed) would have been owned by a country who aims nuclear missiles at us.

Personally, I don't see this stockholder revolt as much more than a temporary setback to the expansionist dreams of CNOOC, who already partners with Royal Dutch Shell on a $4 billion petrochemical project. A large reason that our oil prices have risen to previously unimagined heights is the continuing demand by China on supplies. Recently China supplanted Italy as the 6th-largest economy in the world, and I think within the decade they'll pass the three largest Europeans (Great Britain, France, and Germany.) That would place them with us and Japan in the top 3.

Europe has trouble of a different sort to its east. With the Russian bear being a large natural gas supplier to these countries, a spat involving Russia and Ukraine over natural gas prices spilled over to affect Western countries. As of January 1st, Russia enacted a nearly fivefold increase in their price to supply Ukraine. The Ukrainians allegedly countered by siphoning natural gas off pipelines through their territory intended for points west like Hungary, Poland, and Serbia.

So, in the midst of winter, several European nations had a temporary natural gas supply shortage. With some of these countries being onetime Soviet satellites who are still in the early stages of democracy, it's not out of the question that the Putin regime could certainly extract major concessions from these governments for them to maintain this energy link to their former masters. In the case of the Ukraine, their government has fallen out of favor with their Russian neighbors as they look to Westernize more. With the parliamentary elections in Ukraine occurring this coming spring, some saw this move as a play to prop up opponents of Ukraine president Viktor Yushchenko. He defeated a Russian-backed contender in Ukraine's 2004 election, a vote claimed by some to be tainted with fraud.

This is another reason that I think the U.S. should be heavily investing in finding their own energy supplies. Having these two incidents occur so close together timewise serves as a reminder that when our economy becomes too dependent on others, one hardly-noticed incident can grow to become a wrecking ball to our economy.

Instead of more regulation and red tape, the federal government needs to step aside and let our energy companies (at least the ones that remain ours) do their work to find energy sources within our borders. Are you listening, opponents of ANWR oil exploration?