Despite the huge sums of Russian money spent to discourage US domestic hydrocarbon production production, there’s a glut on the oil market that is demolishing the ruble. The New York Times reports that the Kremlin bankrolled protests against fracking in Europe. Green was really Red.
Before stepping down in September as NATO’s secretary general, Anders Fogh Rasmussen gave voice to this alarm with remarks in London that pointed a finger at Russia and infuriated environmentalists.
“Russia, as part of their sophisticated information and disinformation operations, engaged actively with so-called nongovernmental organizations — environmental organizations working against shale gas — to maintain dependence on imported Russian gas,” Mr. Rasmussen said. He presented no proof and said the judgment was based on what NATO allies had reported. …
“Energy is the most effective weapon today of the Russian Federation — much more effective than aircraft and tanks,” Victor Ponta, the Romanian prime minister, said in an interview.
Russia has generally shown scant concern for environmental protection and has a long record of harassing and even jailing environmentalists who stage protests. On fracking, however, Russian authorities have turned enthusiastically green, with Mr. Putin declaring last year that fracking “poses a huge environmental problem.” Places that have allowed it, he said, “no longer have water coming out of their taps but a blackish slime.”
But the Red/Green campaign availed not. Daniel Yergin writes in the Wall Street Journal that Putin is being crushed by politically incorrect America. “The decision by members of the Organization of the Petroleum Exporting Countrieson Thursday not to cut production reflects a profound shift in the world oil market. The demand for oil—by China and other emerging economies—is no longer the dominant factor. Instead, the surge in U.S. oil production, bolstered by additional new supply from Canada, is decisive. This surge is on a scale that most oil exporters had not anticipated. The turmoil in prices, with spasmodic plunges over the past few days, will likely continue.” Technological advances mean North American oil might be viable right down to $50 a barrel.
It is now clear that the new U.S. production is more resilient than anticipated. There has been a widespread view that at around $85 or $90 a barrel extracting “tight” oil from shale would no longer be economical. However, a new IHS analysis based on individual well data finds that 80% of new tight-oil production in 2015 would be economic between $50 and $69 a barrel. And companies will continue to improve technology and drive down costs.
True, with prices now near or below $70 a barrel, U.S. companies are looking hard at their investment plans—where and how much to cut or postpone. But it will take time for these decisions to affect supply. U.S. oil output will continue to rise in 2015.
The weaker members of OPEC are less adaptable. NPR lists out the points at which various countries are viable. Iran needs $136; Venezuela and Nigeria require $120. Russia needs just over a $100. The emirates can break even at $70.
‘Saudi Arabia, U.A.E. and Qatar can live with relatively lower oil prices for a while, but this isn’t the case for Iran, Iraq, Nigeria, Venezuela, Algeria and Angola,’ said Marie-Claire Aoun, director of the energy center at the French Institute for International Relations in Paris. ‘Strong demographic pressure is feeding their energy and budgetary requirements. The price of crude is paramount for their economies because they have failed to diversify.’
Nowhere will the fall of oil prices have more immediate impact than in what Russian Foreign Minister Sergey Lavrov called “an arc of instability from the Mediterranean Sea to the Persian Gulf” in 2012, a phrase that was echoed almost word-for-word by British Prime Minister David Cameron in 2014. “An arc of instability bends from north Africa to the Middle East,” said Cameron.
Falling oil prices will temporarily weaken the Russian and Iranian positions vis a vis the forces supported by the Gulf Emirates. It will also diminish logistical support for Assad in Syria. The administration finds itself in an accidental position of strength. US domestic oil production which it has tried so hard to discourage, has inadvertently given it a trump card.
But does it know what to do with it? The administration has not been able to press its advantages because it did not realize low oil prices would be an advantage in the first place. And even if they realized they had an ace in the hole, they have no idea what they want in the first place.
The Atlantic Council’s Peter Kirechu says that Chuck Hagel was fired for failing to support the administration’s policy of ambivalence in Syria. “Defense Secretary Chuck Hagel resigned the morning of November 24, his exit tied to irreconcilable disagreement with White House leadership on a variety of foreign policy issues of which the administration’s gloved response to Syria’s Assad certainly featured.”
Earlier in this month, the administration hinted at a possible review of its Syria policy—admitting the limited effect of its current policy—and for the first time floated Assad’s departure as an essential precondition to success in Syria. This tepid admission was, however, rejected within hours and President Barack Obama curtly and with blunt honesty dismissed the notion that his administration was working to remove Assad with a single word answer: “No.” Later in November, news outlets reported Secretary Hagel’s publically hushed objections to the president’s stance on Syria’s Assad in a memo sent to National Security Advisor Susan Rice.
But it was too late.
Hagel had committed the unforgivable crime of having second thoughts about his bosses’ strategy, an offense only slightly worse than carrying the chief’s ideas out. “The doormat gets shown the door,” writes Rosa Brooks in Foreign Policy.
Chuck Hagel wasn’t a genius. But he got a bum rap for being exactly the secretary of defense that Obama wanted — until he wasn’t. … President Obama nominated you to be secretary of defense because he wanted a policy nonentity, and that’s exactly what he got. He wanted doormat, and you gave him doormat.
What went wrong?
What went wrong is that Hagel gave the president what he asked for, not what he would have wanted. As one commenter on this site mordantly observed, the trick to succeeding among incompetents is giving them what they would have desired, not to carry out the instructions they have specified on paper.
Tom Ricks, writing in another Foreign Policy article quotes an unnamed Pentagon insider who listed out everything that was wrong with Chuck Hagel. He was in a word, as lazy and surrounded by yes-men as his chief, but with the difference that he knew he was.
First, Hagel was lazy. This may seem harsh, but the Secretary did not adequately prepare for meetings. Not even close. The 4-5 page briefing papers that Gates devoured, or the two-page memos that satisfied Panetta’s intellectual cravings, were replaced by Hagel’s preferred briefing material: an index card with 25 words on it. …
Second, Hagel filled his inner staff with real-life bobbleheads and poor managers….
Third, Hagel never met a 4-star general whom he could refuse.
America at the end of 2014 is in the strange position of having strengths that no one had even counted on. Its oil industry has produced a cornucopia of energy in despite of administration obstruction. It’s space industry and science are poised to lay the foundation for the commercial exploitation of space. It is, despite everything, in better shape than Europe and in far better condition than Japan.
A new American century may be in the works just when the intellectuals had written it off. The US may is led by unimaginative elites who have no idea what to do with these strengths except tax them. Yet that may be fortunate, almost as if God had blessed America with leaders who are too dumb to know they are.
Maybe the Founders were right: politicians are ultimately necessary evils best held down to as low a level of activity as possible. Ultimately a nation lives or dies on its character and culture. If that is sound then America simply can’t be held down, or maybe that will be China.
Such a result would suggest it wasn’t just Chuck Hagel who didn’t matter; the whole Hope and Change strategy may simply have been the modern equivalent of the Five Year Plan, a MacGuffin everyone thinks is important but has no significance beyond a plot device. The administration’s vain attempt to imitate the ‘decisive leadership’ of the EU, China and other authoritarianisms succeeded because it failed.
After the Great War thoughtful leaders on both sides realized that nothing was more dangerous than hard working idiots who thought they were capable of great things. Kurt von Hammerstein-Equord, the anti-Nazi who became Chief of Staff of the post Versailles German Army had a well-known classification based on the combinations of intelligence and industry:
I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent — their place is the General Staff. The next lot are stupid and lazy — they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent — he must not be entrusted with any responsibility because he will always cause only mischief.
He very much preferred the intelligent and lazy; the geniuses who never took themselves too seriously. The British also realized that there were certain advantages to inefficiency in that you never dug yourself too far into a hole.
The phrase Lions Led by Donkeys was used as a title for a book published in 1927, by Captain P. A. Thompson. The subtitle of this book was “Showing how victory in the Great War was achieved by those who made the fewest mistakes.”
America, with its less efficient government, also makes fewer deliberate mistakes. If the current administration doesn’t blow up the world it may find itself master of all it surveys. In its victory it might well say, “you didn’t build that”.
Neither did you Boss. But if you like to think that Boss, sure. Sure.
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