Don’t count on a Gazprom-ise

By Jeff Myczek

When Russia turned off natural gas shipments to Ukraine last week over a price dispute, it appeared to simply be a dispute between neighbors in the constant power vacuum in states of the old Soviet Union. Unfortunately, it had repercussions far greater – with much warning to the energy hungry industrialized nations of the West.

The dispute between Russia and Ukraine rose over Russia’s demand to more than double the price Ukraine was charged for Russian natural gas from the state-dominated company Gazprom.

Before the Orange Revolution that swept in a pro-Western democratic government in Ukraine last year, Russia sold gas to its neighbor at prices well below market value.

With a government wary of Russia now in power, however, Russia sought to end this deal and in the process attempt to undermine the Ukrainian government and bring it back into Moscow’s orbit.

With Ukrainian refusal to pay the higher prices, Russia shut off natural gas shipments. As Ukraine’s (and Europe’s) largest supplier of natural gas, the government in Kiev is in a difficult situation – in the midst of winter, the source for which many of the nation’s people relied on for heat was cut off.

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    Ukraine had to do something to restore energy supply to its people.

    As the largest supplier of natural gas to Western Europe, Russia supplies the bulk of their shipments through pipelines that pass through Ukraine.

    With no dispute with the West, Russia continued to ship gas through these pipelines. Ukrainians, in desperate need of gas for energy and heat, simply tapped into the pipelines bound for Paris, Rome and Berlin and siphoned off supplies for their own people.

    As the shipments to the West then dropped off, the governments of these countries demanded Russia turn the supplies to Ukraine back on. The United States, also a large consumer of Russian energy supplies, put pressure on Russia to resolve the situation quickly. An embarrassed and seriously undermined Moscow retreated, an agreement to gradually increase prices to Ukraine was offered, and the gas was turned back on.

    As the dust began to settle, serious questions about Russia as a reliable energy supplier arose. After Sept. 11, a West seeking to find alternatives to Middle Eastern oil turned to a Russia who was more than happy to help fill that demand.

    Russia presented itself as a stable, secure alternative to the volatile and corrupt governments of the Middle East. In an era when Russia has almost no remaining industrial or military prowess, its increased power in the area of energy supply restored it to a place of influence and importance it had long since lost.

    As Russia is set to assume the leadership of the Group of Eight industrial powers, the West must ask itself some serious questions. Can an increasingly autocratic, centralized and oppressive Russian state be trusted to become the world’s largest energy supplier?

    In a future political dispute with the West, would Russia be willing to cut off energy supplies to the United States, Britain or Germany in the cold of winter, leaving millions without heat in order to attempt to exercise influence? If the recent situation with Ukraine is any indicator, such a scenario is not out of the question.

    The United States in particular must take some major lessons from this situation. In this time of increased global instability, this state of affairs has simply made the arguments for increased domestic energy production even louder.

    The only way to have effective energy security is domestic production, meaning more oil and natural gas exploration and utilization, increased use of nuclear power and a greater emphasis on renewable resources.

    The United States cannot afford to have our energy supplies held hostage by a foreign power and clearly cannot count on a Russian Gazprom-ise.

    Jeff Myczek is a junior in LAS. His column will usually appear on Thursdays. He can be reached at [email protected].