In the latest news discussing the ongoing Iraqi conflict between the incompetent forces of Nouri al-Maliki, the Islamic State, the Kurdish Peshmerga, and so many other factions, one thing that has not been discussed is the importance of oil in the conflict.
If the Islamic State is to approach anything nearing an actual state, it is going to need oil to fund its grand ambitions. Obviously massive sanctions are in place to try to prevent ISIS from selling their oil, but recent reports indicate that ISIS in fact is making up to $1 million per day on the sale of black market oil and could make up to around $3 million assuming further campaigns against Syrian dictator Bashar Al-Assad are successful. The fact that ISIS has been able to sell their oil, while the Kurds are currently stuck in legal disputes with Baghdad and the United States over their right to sell oil, has meant that ISIS can buy heavy weapons and munitions which has enabled it to drive back the Kurdish forces in recent days. This is particularly concerning given that the Kurds appear to be one of the few native groups who possess the actual capabilities to stand up to ISIS.
This is just the latest turn of events in a conflict which possesses serious geopolitical ramifications for not just the Middle East, but for the world. The United States is stuck between wanting to help the Kurds and the fact that if America just abandons Maliki, it will concern other allies across the world who might view us as a fair-weather ally. Can the Islamic State buy time and power to become independent of the Sunni tribal leaders who form a pillar of their support and who have openly talked of turning on ISIS once Maliki is gone? Can Maliki continue to stretch the bounds of what it means to be an incompetent leader? What are the serious implications if ISIS emerges completely triumphant? These are at minimum interesting storylines which have real importance.
So why the heck does the media and the global population care so much not about this, but the recent Gaza conflict?
On June 2, 2014, the Environmental Protection Agency proposed the Clean Power Plan (CPP) to battle carbon emission levels. The EPA called for a plan which would cut carbon emissions from power plants, the biggest source of carbon pollution, by 30 percent by 2030. As expected from anything relating to the EPA, the proposal has been supported and attacked. The National Review noted the importance of coal to the global economy and pointed out America’s efforts to reduce carbon emissions. On the other hand, the Natural Resources Defense Council discussed the potential health benefits.
Today, the Center for Strategic and International Studies paired up with the Rhodium Group and released a study detailing the possible effects of the CPP. One thing that the report discussed is the fact that states like Texas and Oklahoma actually could benefit the most from the EPA’s proposal. Texas would have to work harder than every other state to reduce carbon emissions to acceptable levels. However, they would be able to compensate by increased national demand for natural gas. The report actually stated that Texas could earn around $17 billion from the plan, while coal-based states like West Virginia and Wyoming would suffer. The New York Times and the Huffington Post have already used this to castigate those states for their lack of support for the Clean Power Plan.
However, that was not everything covered in the report. In a presentation which was entitled “Remaking American Power: The Economic and Energy Impacts of Power Plant Emission Standards”, a few things that I observed today:
For those who wonder why the Senkakus are a big deal, and for those who have to be reminded that there is more to East Asia infighting then the weekly Japan-China-Korea spats:
China and Vietnam have been arguing over a Chinese oil rig which Vietnam argues is located in Vietnam’s Exclusive Economic Zone.
The Daily Kos for once managed to come as close as it can to admitting a good thing about the Keystone Pipeline: if the Pipeline is not built, oil companies will just transport their oil by rail, which is less environmentally safe, more expensive, and more dangerous to human lives.
As the Daily Kos notes, transportation of crude oil by railroad has increased 74 percent since 2012. This has led to accidents like the Saint Lac-Megantic Disaster, where 47 people and billions of dollars in property by a derailed crude oil that blew up. And the tragic disaster in Quebec is hardly a single anomaly. Residents had to evacuate in North Dakota in response to a crude oil derailment, and as of May 2014, over $10 million in property damages have occurred thanks to train incidents regarding rude oil. The State Department last week released an analysis of the Keystone. They explicitly stated that the amount of injuries and death caused by crude-oil rail shipments will increase fourfold over the next 10 years if the Pipeline is not built.
Because the Daily Kos is the Daily Kos, they choose to blather about how we must wean ourselves off of oil and so must fight both the Keystone Pipeline and rail shipments. Well, perhaps it would be best for them to take a look at Japan then. In a lecture at the Brookings Institute last week, Toshikazu Okuya, the Director of Energy Supply for Japan’s Ministry of Economy, Trade and Industry talked about Japan’s ongoing efforts to promote renewables. The result is that Japan is now importing its highest percentage of fossil fuels in over 40 years. This has negatively impacted the Japanese economy, as its trade surplus has fallen into a significant trade deficit to pay for the higher imports of oil and natural gas. Meanwhile, Japan’s energy costs have risen more than any developed nation in the world, with the exception of one country – Germany, which continues its drive to develop solar and wind, the middle class’s energy costs be damned. Score one for green energy.
The fact is that America is a nation that runs on oil, and that for now, solar and wind continue to remain a chimera. The best way for America to transport its newfound energy abundance is to rely on pipelines and not relatively unreliable and unsafe trains.
The Brookings Institute held a discussion today about the future of Russian gas markets and Gazprom, especially in the aftermath of the Russia-China deal. I have a summary of some of the topics which the energy experts discussed during today’s meeting below, but there is one thing I want to focus on in particular: namely, the idea that somehow America is capable of driving out Russian natural gas.
Ever since the Ukraine crisis began a few months ago, a common refrain of discussion has been the idea that the American shale gas boom can help America supplant Russian natural gas. Russia is the main supplier of natural gas to Europe, but given its political relations with Western Europe, the idea is that America could become an alternative source of energy, one which is not beholden to autocratic interests like Putin’s Russia. But as oil and gas experts have noted, including the group leading the discussion today, the idea of America saving Western democracy with natural gas is utterly infeasible.
Reuters and other new sites today are reporting that China and Russian company Gazprom are on the verge of finalizing a natural gas deal that would be signed tomorrow. This deal would see Russia export 38 billion cubic meters/year to China at a price of about $350-400 per 1000 cubic meters. That amount would be about a quarter of China’s current natural gas consumption. China’s demand for gas has grown exponentially over the years, increasing nine fold since the turn of the century. And while China’s domestic production is expected to make a leap over 2014 and 2015 from 200 million to 6.5 billion cubic meters as I observed in an earlier post, it is nowhere near enough to power its growing economy. Yet despite the fact that China will need gas more than ever in the future, China and Russia have chosen to sign an agreement now, and President Vladimir Putin will be flying to China to ensure the deal is done.
Two weeks ago, the Intergovernmental Panel on Climate Change (IPCC) released a report which discussed the dire effects of climate change as well as the failure of governments across the nation to actually do anything about it. Among things discussed in the IPCC report was the fact that rising middle-income nations like China are the biggest contributors to new greenhouse emissions.
Well, the IPCC certainly will not be feeling better about new Chinese efforts to increase its coal production. This is not to say that China has been totally negligent in its desire to pursue renewables. China has been investing a great deal in renewable energy over the past year, with some reports stating that almost 60% of new Chinese energy capacity is in renewables. But the reality is that while the percentages may be in favor of renewables, dirty, polluting coal remains the primary energy source for China. Renewables simply do not represent a viable short or medium term alternative coal.
So, China’s use of coal will continue to grow. China is currently discussing with Turkey a possible $10-12 billion investment into the Afsin-Elbistan coal field, and is expected to increase coal generation from 36 Gigawatts (Gw) in 2014 to 47 Gw in 2017. Meanwhile, shale gas in China is also expected to grow by leaps and bounds, jumping from 200 million cubic feet currently to as much as 6.5 billlion in 2015. Perhaps the percentages may be favoring renewables for the long-term. But if climate change is as dangerous as the IPCC makes it out to be, Earth does not care about percentages, it cares about the flat rate of emissions.