By Aliza Kempner
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Work on the Nord Stream pipeline. By Bair175 (Own work) [CC-BY-SA-3.0], via Wikimedia Commons |
The political scene remains fiery in the Crimean peninsula, it’s looking like Ukrainians may soon lose the
ability to keep heat in their homes. Gazprom,
Russia’s state-owed monopoly of natural gas, is threatening to pull the cord on
its subsidized trading of natural gas to Ukraine. This isn’t just Ukraine’s
problem either - most of Europe gets its gas from Russia, and the United States
may soon add our own fuel to the fire.
In December of last year, former Ukrainian leader Viktor Yanukovych brokered a deal with Russian President Vladimir Putin to allow
Ukraine to purchase natural
gas at a price of $268.50 per
thousand cubic meters of gas rather than $400. Ukraine depends on Russia for
between 60-70 percent of the gas is uses to heat homes and keep businesses
running. Since then, however, Yanukovych has been overthrown in a frenzied uprising, and as the
Kremlin recently reminded it, Ukraine still owes Gazprom a whopping $1.55
billion. This is a little more than most countries would be okay with spotting
neighbors to cover the gas bill, especially when that neighbor was rumored to have
stolen gas transported through its territory en route to Europe and already had a
reputation for making late payments. Still, the loss of this deal, which had provided
Ukraine with a total saving of $2 billion per year, could be catastrophic for Ukraine, especially as an unsteady new government tries to take charge
and Russian troops intensify their attempts to control the region.
This isn’t the first time the Russians
have withheld gas or hiked up the prices as a form of sanction. This move has historically become Europe’s
problem, too, since much of the continent depends on Russia to provide its gas
supplies. Importantly, two major Russian pipelines run through Ukraine, feeding
twelve European countries. When Russia cut the gas flow in 2009 as a result of
Ukraine’s nonpayment, Croatia and Serbia lost all their gas from Russia, and
countries like Austria and France lost about 30 percent. This time around, at
least, things might not be looking as dour for European consumers. Since 2010,
Russia has had a new system of pipelines in the works, destined to bypass
Ukraine in delivering natural gas to Europe. Already, in contrast with the
early 1990s, when Russia sent all of its gas destined for Europe through
Ukraine, by 2013 only half that gas traveled through Ukrainian soil. Having
these pipelines in place will give Russia
even more authority over Ukraine, allowing Moscow to stop gas flow without a
fear of backlash from the European Union.
As another twist, the United States is looking to capitalize
on its store of natural gas to heighten American geopolitical power. While Russia remains the
biggest exporter of natural gas in the world, the United States recently blew
past it to become the greatest producer
of natural gas, with the rise of hydraulic fracking playing a part.
Should America come to the rescue? Some think so. In particular, Congressional Republicans have
teamed up with massive oil and gas producers like ExxonMobil in pushing the
administration to hasten the issuing of oil and gas permits. Speaker of
the House, John Boehner, even wrote an article
advocating that America join the fray for supplying natural gas to the Ukraine.
Moreover, the State Department’s Bureau of Energy
resources has put an initiative in motion to use a new supply of American
natural gas as a lever against Russia, hoping to reduce the chances of supply
shocks and protect economies against sudden spikes in gas prices. Nevertheless,
the new boom in energy derived from fracking carries heavy consequences for the
environment, with environmentalists decrying its potentially
catastrophic implications for pollution, and the practice also is insidiously making its
way into European countries like Poland.
Finally, even if America coming in and changing the
game sounds great on paper, is it really even feasible?
There’s reason to
believe that even when American export terminals are operating in full force,
most of that gas will be tagged for the Asian markets.
As Ukrainian blood continues to spill, the conflicts bring new questions to
the basis for Western intervention: long-term questions of energy security,
climate change, and fears about geopolitical struggles.
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