In the high-stakes arena of energy geopolitics, natural gas is rapidly emerging as the next big prize. What oil was to the twentieth century, natural gas will be to the twenty-first. Consider these recent developments:
As we went to press, Russia was restoring the flow of natural gas to Western and Central Europe after state-controlled Gazprom curtailed deliveries on January 1 in a bid to force Ukraine to pay the market price for gas previously supplied at subsidized rates. Although emphasizing the price issue, Russian officials apparently intended to constrict Ukraine’s energy supplies as a way of punishing that country’s pro-Western president, Viktor Yushchenko, architect of the Orange Revolution, for his overtures to NATO and the EU. Gazprom’s pipelines to Western Europe (which buys a quarter of its gas from Russia) pass through Ukraine so it could siphon off some of the diminished supply, leaving very little for other customers and provoking fears of an energy crisis at the onset of winter.
A dispute between China and Japan over the ownership of an undersea gas field in an area of the East China Sea claimed by both countries has grown increasingly inflammatory, with China sending warships into the area and Japan threatening “bold action” if the Chinese begin pumping gas from the field. The conflict has soured relations between Beijing and Tokyo and provoked a strong nationalistic response from the populations of both countries. The huge anti-Japanese demonstrations in Shanghai and other Chinese cities last April were prompted, in part, by Tokyo’s announcement that it would permit drilling in the area by Japanese firms. A peaceful resolution of the dispute does not appear imminent.
Ever since India announced plans more than a year ago to build a natural gas pipeline from fields in Iran to its own territory via Pakistan, the Bush Administration has been applying pressure on New Delhi to cancel the project, claiming it will undermine US attempts to isolate Tehran and curb its nuclear efforts. “We have communicated to the Indian government our concerns about the gas pipeline cooperation between Iran and India,” Secretary of State Condoleezza Rice announced after meeting with Indian Foreign Minister Natwar Singh on March 16. But the Indians have continued talks with Islamabad and Tehran over the pipeline plan.
The United States is becoming increasingly dependent on natural gas. This country now relies on natural gas for approximately one-fourth of its total energy supply, more than from any source except oil. As a result, the economy has become more and more vulnerable to fluctuations in gas supply and pricing–a vulnerability that should be especially evident this winter as gas prices hit record levels, with painful effects on the poor. Natural gas provides approximately 14 percent of the energy used to generate electricity in this country, 45 percent of home heating fuel and 31 percent of the energy and petrochemicals consumed by agriculture and industry. Gas is also used as a feedstock for the manufacture of hydrogen, a promising new entrant in the race to develop alternative fuels.