The New Empire of Energy

FT Berlin correspondent Bertrand Benoit writes in yesterday's paper on the increasingly visible influence of Russian energy supplies on European foreign policy.

Schröder never speaks out on Putin's human rights abuses in Chechnya or his interference in Ukraine's affairs," says Friedbert Pflüger, member of parliament for the opposition Christian Democratic Union. "And there is a suspicion that this has to do with oil and gas."

Mr Putin's increased authoritarian style at home and with neighbours has raised concern and prompted a re-examination of Europe's links with Russia.

The French and British governments are particularly worried that Moscow's rising prominence as an energy supplier, not just to Germany but to Europe, is turning into an economic and political hazard for the entire continent.

This was exactly the worry highlighted by a report on Energy Security produced by Dutch academics for the European Commission last year (available here). Without the military means to influence or even in extremis to reshape producing areas, as the US continues to do in the Persian Gulf, Europe might find itself subject to the ruthless gas diplomacy of the Kremlin. Press reports noted that gas shipments to Ukraine through Russia were cut off after the recent change of government by Russia's oil and gas national champion OAO Gazprom.

I finished Michael Klare's book Blood and Oil recently, but I wasn't entirely convinced by his argument that war will be an inseperable part of the oil industry, as market logic would push towards substitues, even among other fossil fuels.