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My College Thesis Was Right About Russia and Natural Gas

Scott Bean's picture
Individual Entrepreneur Self-employed

Trilingual specialist in international energy and political affairs.

  • Member since 2018
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  • Jan 24, 2022
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It was about 16 years ago that I wrote my college thesis. The topic: why natural gas will make Russia a force to be reckoned with. While I was confident in my thesis's chief conclusion, I never imagined the extent to which it would prove true. Alas, with Russia becoming increasingly more threatening to its neighbors, near and afar, and countries such as Germany becoming more reliant on it, one thing is clear: as long as Russia is a major natural-gas exporter, it will be a force to be reckoned with.

Today, such a conclusion doesn't seem daring in the slightest: natural gas is becoming an ever more important energy source on the backdrop of the shuttering of nuclear and coal power plants and the increasing reliance on intermittent solar and wind energy. Hindsight, however, tells a different story. Back in the mid-2000s, Russia had yet to make any aggressive foreign policy moves, and overall Western interest in Russia was very low. In fact, many were those who found bizarre my infatuation with the Russian language and profound interest in the country's political and economic systems. To me, writing Russia off was a big mistake. Still, the lion's share of people's interest in foreign affairs went increasingly to the Middle East and Asia. Namely, places where military and economic activity were much greater.  

What has taken place in subsequent years, however, not only supports what I wrote many years ago, but does so to a much greater extent that I could have imagined: some European countries, led by Germany, have worked tirelessly both at home and abroad to undermine nuclear energy, the one clean, inexpensive energy source that can properly defend against Russia's ability to use natural gas as a political weapon. Despite its efforts resulting in Europe's most expensive electricity and fuel prices, increasing dependence on Gazprom, and resorting more and more to coal, it is truly surreal to watch Germany continue its dogmatic crusade against nuclear energy, all to the benefit of Russia and to the detriment of Western security.

The Biden administration hasn't exactly helped. The decision to allow the Nord Stream 2 pipeline to be completed was shockingly naive. The US, in all seriousness, warned Moscow not to use the pipeline for political purposes. While the results could not have been more predictable, democrats continue to stress the importance of not irking Germany, of maintaining good relations with it. How much fealty does Germany have to demonstrate to Russia before reality is in fact recognized? 

So, as the latest conflict between Russia and the West unfolds, it would behoove the West to keep in mind what my thesis concluded many years ago: if you are reliant on Russian natural gas, Russia will remain a force to be reckoned with. Add on that if you crusade with foam at the mouth against nuclear - the only energy source that can minimize Russian natural gas's influence - you can expect that baggage to get only heavier.

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Matt Chester's picture
Matt Chester on Jan 24, 2022

So, as the latest conflict between Russia and the West unfolds, it would behoove the West to keep in mind what my thesis concluded many years ago: if you are reliant on Russian natural gas, Russia will remain a force to be reckoned with. Add on that if you crusade with foam at the mouth against nuclear - the only energy source that can minimize Russian natural gas's influence - you can expect that baggage to get only heavier.

Do you have concerns that a similar 'beast' may be created in the world of rare earths and who controls those supplies as batteries become more globally integral? 

Scott Bean's picture
Scott Bean on Jan 27, 2022

China has been that beast in rare earths for years now. Many believe its dominance comes from natural supplies of these oxides, but that has little, if anything, to do with it. What's important is the full value chain. If you have a rich rare-earth mine but lack processing, off-take, etc., then that mine is worthless. China dominates, because it has the full value chain, including the necessary processing capabilities and off-take, at prices that no one can beat. Until another country sets up a rival, price-competitive full value chain, China is going to continue to dominate. It used its clout in rare earths back in 2011, and the potential for it to do so again is great if other country's like the US don't create full value chains or if substitutes at equal or lesser cost and equal or greater performance are not widely commercialized. 

Jim Stack's picture
Jim Stack on Jan 26, 2022

Scott, Good incite. Russia has always been a force in Energy. They used to supply Cuba and when it stopped the country had to change everything. If fact almost every war has been over energy. NG and more recent over OIL. As Matt points out the future may be about rare earth material for batteries as they make all power better. Maybe material for carbon fiber for great strength with light weight will also be in demand.

   So far other countries are a big source for Lithium. Recycling is also big so Russia may not be a big factor. 

 

QUOTE=While Chile, Australia, Argentina and China are home to the world's highest lithium reserves, other countries also hold significant amounts of the metal.Nov 16, 2021

Scott Bean's picture
Scott Bean on Jan 27, 2022

Thanks for the feedback, Jim! Mineral resources do indeed play a decisive factor in war. As for rare earths (specifically those used important in high-powered magnets), I doubt they will reach anywhere near the importance of fossil fuels and nuclear any time soon. Their use in energy is dominated by renewables, and the vast limitations of renewables are well documented in energy physics and global precedent. Even as billions have been spent on non-fossil and non-nuclear energy-source development over the past few decades and even as we keep hearing about the lightning-fast improvements in renewables, the world still renders some 80% of its primary energy from fossil fuels. That's not fortuitous.

 

As for Russia, it could be so much more of a force in so many different areas besides energy, but it isn't, and there are specific reasons for that. I'm planning on writing more about my years of experience in this regard with Russian state companies, such as Rosatom. Business Russian style is not for the faint of heart. 

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