The stability of oil supply takes another hit

The stability of oil supply takes another hit

The all-out war in Georgia finally moved from page 14A to the front page in my local paper today: about time. But the story leaves out entirely one of the most important elements of the conflict: the oil factor. The Baku-Tbilisi-Ceyhan Pipeline runs from Azerbaijan to Turkey through Georgia and, with a one-million-barrels-per day capacity, is a key provider of energy for the EU and the United States. In fact, along with the sister Baku-Supsa Pipeline, it’s the sole supply link for oil resources in this area that wasn’t controlled by Russia or Iran.

Bonus points for you if you recognize the destruction of this pipeline as the world-shattering MacGuffin in the James Bond movie The World Is Not Enough.

News reports in the U.S. seem to downplay the oil angle, probably in hopes of maintaining the recent slide in oil prices. But the threat is very real – not just that hostilities will damage the B-T-C pipeline (which is already shut down for the moment due to PKK insurgency last week in Turkey), but that Russia will seize control of the pipeline and use it as a tool to control prices and exert power over the West. Indeed, that may be a prime reason for the Russian attack on Georgia. As noted in earlier posts, in the World Without Oil game, players predicted aggressive moves such as this by the new petropowers to consolidate their energy control…. As with Iraq, if oil is not the #1 reason given for invasion, it will be a faithful and constant #2. Photo by YourLocalDave via Flickr.

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