Monday, January 2, 2006

Green Car Congress: Russia Turns the Natural Gas Screws on Ukraine, Europe Feels Effect

Green Car Congress has a report about a crisis in natural gas supply between Russia, Ukraine and the rest of Europe. Apparently Russia has jacked up Ukraine's prices, and the resulting dispute has interrupted natural gas supply to Ukraine. Russia Turns the Natural Gas Screws on Ukraine, Europe Feels Effect (Green Car Congress, 2 January 2006)

One of the comments on GCC is "Ukraine has to pay market price, so US can't object to capitalism. This is direct result of Ukraine's orange revolution." to which I say... your nuts. It isn't capitalism to jack up prices just because of a change in government. That's manipulation. Russia was on the losing side of the Orange Revolution event, and I suppose now they want to use the cold of winter to create a heating crisis and maybe anger the people of Ukraine enough to topple the government. That is not capitalism at work.

Some interesting factoids in the article -- Russia has the largest Natural Gas reserves in the world, followed by Iran. The three major fields, Urengoy, Yamburg, and Medvezh’ye, are in Siberia and the Russian Gas company, Gazprom, admits these fields are in decline and there will be "steep" declines in output between 2008-2020.

That makes part of this episode looking to the future of the peak for natural gas having been reached.

The "peak oil" effect also applies to other natural resources. The model is that there is a fixed amount of each resource on the planet. And humans have a given ability to tap those resources. Between usage of the resource, the resulting depletion of the resource, and the ease/difficulty of tapping the resource, a peak will be reached in production capacity. For example the U.S. reached its peak of oil production capacity in 1970. The world is projected to reach its peak of oil production capacity, well, any day now, if not already.

Try as you might, after the peak is reached you can't increase production because the resources are heading towards depletion.