Friday, July 7, 2017

Pepe Escobar — Washington and Berlin on a Collision Course

In a joint statement, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern stressed that, “Europe’s energy supply is a matter for Europe, not the United States of America”; “instruments for political sanctions should not be tied to economic interests”; and the whole thing heralds a “new and very negative quality in European-American relations”.
An oil trader in the Gulf bluntly told me, “the new sanctions against Russia basically amount to telling the EU to buy expensive US gas instead of cheap Russian gas. So the Germans and the Austrians basically told the Americans to buzz off.”...
Counterpunch
Washington and Berlin on a Collision Course
Pepe Escobar

67 comments:

Kaivey said...

This will be interesting to see.

Matt Franko said...

There is also the matter where Russia shut off the gas which started this whole mess....

Trump pointing this out today:

https://twitter.com/business/status/882895591855935488

Tom Hickey said...

Why did Russia constrict the gas supply?

Because the Ukies were siphoning it off as it passed through Ukraine and not paying for it. So basically Ukraine shut if off.

Nord Stream 2 and South Stream would bypass Ukraine.

Tom Hickey said...

Not to worry though. A pipeline is being constructed from Russia to China, and China will be happy to take the gas as it switches off more polluting fuels.

Matt Franko said...

Vlad called Hugo Chavez for Red side playbook when it went over $13 and reneged... started the whole thing...

Matt Franko said...

Now look at Venezuela... Russia could go the same way ... chances are less but don't count it out entirely...

Matt Franko said...

Tom they were supposed to be siphoning it off that was how the deal was structured ... i.e. a royalty of the volume ....

Vlad looked at how much it was in EUR and USD and reneged ... iow Vlads indignation is measured in foreign currency terms just like any other USD zombie...

Matt Franko said...

They need term limits over there... the guy has been in there way too long...

Bob said...

Europeans are enamored with affordable Russian gas... someone will be getting the cold shoulder.

Bob said...

What is wrong with Poland? It's been nearly 30 years since the fall of the USSR.

Tom Hickey said...

What is wrong with Poland? It's been nearly 30 years since the fall of the USSR.

At least a thousand year history.

Left to themselves the Europeans can't help themselves from fighting each other. It's cultural "heredity," aka path dependence.

This is the point of NATO, the EU, and EZ.

Matt Franko said...

Trump will just sell Poland US LNG as it would be more reliable supply...

Matt Franko said...

"It's been nearly 30 years since the fall of the USSR"

Somebody tell Russia they're the ones with the KGB guy running the place...

Tom Hickey said...

Trump will just sell Poland US LNG as it would be more reliable supply...

As long as they can get the US government to pay for the price discrepancy in the market.

Poles are happy, US gas producers are happy, and hey, it's just fiat, right? Doesn't really cost the US government anything.

Matt Franko said...

Pipelines aren't free to operate either Tom...

Matt Franko said...

Not economical over 3,000km (1,800 miles)

http://voices.nationalgeographic.com/2014/05/13/greening-natural-gas-delivery/

This should go on a while until all the USDs out there eventually come back...

Matt Franko said...

Lots to collect back from the zombies:

http://ticdata.treasury.gov/Publish/mfh.txt


MRW said...

Matt, all,

Now look at Venezuela... Russia could go the same way ... chances are less but don't count it out entirely...

Nah. Russia won’t go the same way. In fact, in the first days of the sanctions, Russia shored up its agricultural production and refused to buy foodstuffs from Europe in retaliation, ruining markets in Poland and the Baltics, and the chocolate market in the Ukraine that the current Ukrainian prez owns (although he does have factories in Russia).

What happened to Venezuela, and why the lower and middle classes are now starving, is because Venezuela decided to import food. Not only exotic American and European foodstuffs, but basics. Venezuela had figured its petrodollars would go on forever when the price of oil was a 100 bucks a barrel, so it didn’t bother to develop its own agricultural infrastructure for its lower and middle classes.

Chavez had started importing food to feed the masses, and giving it out for free. That’s how he became so popular there. Chavez started this before the 2008 GFC.

Matt Franko said...

Agree The chances ofRussia going full venezuela are much less MRW but are non zero...

Six said...

The dollars will come back when the holders decide to purchase stuff for sale in the US. And not a moment sooner.

Matt Franko said...

Venezuela and Russia both reneged at the same time and for same commie reasons...

Six said...

The chances of any possible outcomes are non zero ...

Matt Franko said...

We won't go into Venezuela during Trump admin until it gets much worse imo...

Matt Franko said...

Trump might not even take Venezuela for free...

Matt Franko said...

They have to make sure their material systems competent people remain well materially compensated ... otherwise those people are going to leave and they will go down the poop shoot like Venezuela currently...

MRW said...

Matt,

Not economical over 3,000km (1,800 miles)

http://voices.nationalgeographic.com/2014/05/13/greening-natural-gas-delivery/


That’s bullshit. We’ve been getting oil from Prudhoe Bay since 1973 via pipeline. Ditto Alberta syncrude. If pipelines weren’t economical, we would have shipped the stuff in tanker ships to Washington or Oregon state, and killed the refineries in Houston.

The guy who wrote that article in the National Geographic isn’t an oil and gas man. He’s a fucking environmentalist riding the GHG scare, and his article is full of enviro-catch phrases and devoid of facts. Oil and gas men will tell you: pipelines—I mean well-maintained pipelines, not the water spouts that frequently pass for them here and fail—are the most economical and the safest means of transport. That was widely discussed when that oil train in Quebec, or somewhere in eastern Canada, derailed.

The author has a Ph.D. in Environmental Planning, Department of Urban Studies and Planning from MIT. He’s an activist. ’Nuff said. Here’s his CV:
https://www.ceoe.udel.edu/File%20Library/Our%20People/Profiles/saleem/CV-Saleem.pdf

Matt Franko said...

Doesn't Prudhoe freeze up?

Matt Franko said...

Also I think he is talking about gas pipelines... not petroleum

MRW said...

Matt,

Somebody tell Russia they're the ones with the KGB guy running the place...

You really have it out for that guy. Putin has over an 80% approval rating in Russia. They know exactly who he is and they love him. Guess you didn’t bother to watch The Putin Interviews.

MRW said...

Also I think he is talking about gas pipelines... not petroleum

Gas is a by-product of petroleum production.

Matt Franko said...

It's already started:

https://www.google.com/amp/foreignpolicy.com/2017/06/08/first-u-s-natural-gas-shipped-to-poland/amp/

Matt Franko said...

And to China:

https://www.google.com/amp/mobile.reuters.com/article/amp/idUSKBN1882J4

Horse has already left the barn....

Matt Franko said...

Chavez was very popular too...

MRW said...

Matt,

Doesn't Prudhoe freeze up?

Sure, but that only affects the flow through the pipeline (so, many of the new double-walled and sensored pipelines now have heating coils). If oil froze, you wouldn’t be able to drive a car, truck, or skidoo, in northern Canada, Russia, Sweden, Norway, etc. Or run a fucking ship in the Arctic.

MRW said...

Or a generator in Antarctica.

MRW said...

Chavez was very popular too...

Sure, he was. He gave his poor bread, and imported meat and vegetables that they didn’t grow.

When the USSR broke up, about the only country in the eastern bloc that didn’t suffer the way the Russians did were the Hungarians. Why? Because just about every household had a 9 sq ft plot of land where they grew vegetables. The city dwellers had family in the rural areas.

Matt Franko said...

Correct but I would point out that eventually they will run out of USD savings and then what...

MRW said...

And to China:

https://www.google.com/amp/mobile.reuters.com/article/amp/idUSKBN1882J4


Yeah, but as the article says, only 7% of China’s needs.

China is building a MASSIVE pipeline to Russia. They signed that $400 billion energy deal after Obama slapped sanctions on Russia a few years ago. The Chinese-Russia pipeline is really innovative as well.

MRW said...

Correct but I would point out that eventually they will run out of USD savings and then what...

Who? Which country?

Matt Franko said...

Well you can't compare it to ship transport if the port is frozen... apples and oranges...

MRW said...

Well you can't compare it to ship transport if the port is frozen... apples and oranges...

They have heat in Alaska, Matt.

Matt Franko said...

Venezuela is close and Mexico is getting closer...

US firms going after the USDs that are out there makes some sense but I don't think anyone is thinking about what happens when those savings are depleted...

Matt Franko said...

I assume the Nat Geo guy is comparing the economics of gas pipeline vs LNG carrier...

He is saying that at 3,000km the LNG carrier is cheaper... if the port is frozen then LNG is N/A...

The CONUS ports don't freeze and neither do Poland or China...

Matt Franko said...

Or he is saying it takes more energy to pressure a 3,000km than can be transported...

MRW said...

US firms going after the USDs that are out there makes some sense but I don't think anyone is thinking about what happens when those savings are depleted...

Well, China will start dictating that it will only pay in Yuan. It already has somewhere but I forget where.

Venezuela is a basket-case. Mexico, surprisingly, has upped its agricultural production and Central Americans are flocking there instead of here.

MRW said...

if the port is frozen then LNG is N/A...

The CONUS ports don't freeze and neither do Poland or China...


None of the ports freeze, Matt. Even the ones in Siberia. They need human beings to handle production and operations. LNG achieves its compressed state by cooling the gas to about -161 C.

Matt Franko said...

Here FOB Japan this year from Louisiana for under 7 bucks:

https://www.eia.gov/dnav/ng/NG_MOVE_POE2_A_EPG0_PNG_DPMCF_M.htm

MRW said...

Here FOB Japan this year from Louisiana for under 7 bucks. Dont understand the sentence.

Matt Franko said...

Some US producer is delivering LNG to Japan for less than $7 .... "Freight On Board" Japan i.e. Includes delivery ...

Would probably be less FOB Poland...

Matt Franko said...

https://www.thebalance.com/retail-shipping-terms-fob-2890156

MRW said...

We'll see.

MRW said...

Gotta' run.

Matt Franko said...

So you have to see what Germany would sell gas to Poland for via Nordstream ...

They will probably have to be well under $5

MRW said...

Which means that Germany would have to purchase it for "well under $5." Fat chance. From where? Germany doesn't produce gas.

Tom Hickey said...



Cheaper than sea. If sea were cheaper, it would already be being shipped from Qatar and there would not be a need for a pipeline though Syria. Qatar is gas-rich.

Tom Hickey said...

Agree The chances ofRussia going full venezuela are much less MRW but are non zero...

Adding apples and oranges. Very different situations. Same with China. Even NK is less vulnerable than the Western press makes it out to be.

The problem in Venezuela was basically two-fold. First, the government did not understand how to deal with currency and secondly, the upper and "middle" classes were completely opposed to cutting the lower classes that comprise over half the population in the good times. Moreover, there was very active participation by outside forces in regime change, similar to Brazil.

Tom Hickey said...

Neither the USSR or China, or Russia since the collapse have been headed by a very senior intel officer. Putin was second tier and never served at HQ.

On the other hand, Poppy Bush had been the CIA director.

So people should STFU about Putin as KGB.

Tom Hickey said...

Correct but I would point out that eventually they will run out of USD savings and then what...

The Chinese will explain MMT to them.

Anyway, China is not going to let Russia go down. It's a strategic asset for them. With Russia China can easily hold off the US and its allies, none of whom are up for a land war in Asia with two nuclear powers.

Tom Hickey said...

Russian gas is priced at about USD5.00 metric ton and the price in the US is about $3.00. The shipping cost would have to be about $2.00 to be competitive.

Matt Franko said...

It's pretty far by ship Tom

Tom Hickey said...

Actually, they've been considering this for some time. There is no infrastructure for it in Europe. Terminals would have to be constructed at the port and pipelines from there for distribution around Europe.

MRW said...

Neither the USSR or China, or Russia since the collapse have been headed by a very senior intel officer. Putin was second tier and never served at HQ.

On the other hand, Poppy Bush had been the CIA director.

So people should STFU about Putin as KGB.


Fucking brilliant comment. I’m stealing it. So dont get all all crazy when I pass it off as my own.

Tom Hickey said...

You are welcome to it. Populate it.

Kaivey said...

Awesome! I'm stealing it too and will put it out on the Guardian. Thanks for that.

Matt Franko said...

Right the KGB training is just like the Dale Carnegie courses....

Tom Hickey said...

Right the KGB training is just like the Dale Carnegie courses....

CIA training isn't? Really? These guys are the torture experts.

Tom Hickey said...

Oh, and did I mention rendition (kidnapping from foreign countries) to torture sites on foreign soil?