Archive for June, 2012

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Geopolitics in Eurasia: What is Uzbekistan up to?

June 29, 2012

Uzbekistan, which was a charter member of both the Collective Security Treaty Organizaton (CSTO) and the Shanghai Cooperation Organization (SCO) disrupted both organizations this month.  Two weeks ago, the SCO held its annual military exercises.  Uzbekistan has traditionally declined to participate in this event, but this year it went further when it forbade Kazakh military forces from transiting its territory or airspace to the exercise location in Tajikistan.

Then, this week, Uzbekistan announced that it was suspending its membership in the CSTO.  Uzbekistan is also a partner in the third competing politico-military organization in Eurasia, the NATO sponsored Partnership for Peace.  The Uzbeks have not done anything to upset that apple cart this month; indeed, at the beginning of the month, they signed a deal with NATO to allow the transit of NATO equipment through their nation as the Afghanistan pullout picks up speed.

As a reminder, here are the competing alliance structures in the Central Asia region:

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$100 Billion shale gas windfall

June 27, 2012

A new study from the Yale Graduates Energy Study Group used common cost benefit analysis to find that, in 2010 alone, natural gas fracking contributed a $100 billion surplus to the broader US economy.  Note – this is not the profits claimed by energy companies, but the excess benefit that fracking added to the economy.  Additionally, the study authors find that every million barrels of oil that are replaced with the BTU equivalent of natgas is another $25 billion benefit to the economy.

And this is just the beginning.  As we like to say around here:  Welcome to the Shale Age.

hat tip to Marginal Revolution for the pointer to this paper.

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Environmental issues temporarily block Uinta Basin oil shale project

June 26, 2012

Regular readers know that EnerGeoPolitics has been following efforts to develop oil shale for a long time.  The engineering problems seem to be nearly solved, but environmental issues may prove to be a more difficult obstacle to surmount.

Red Leaf Resources is the developer of an innovative process that turns kerogen, commonly known as oil shale, into petroleum without the use of vast amounts of water (other kerogen processing technologies use as much as three gallons of water to produce a single barrel of oil).  The EcoShale process, if successful and cost effective, would revolutionize the world energy picture – the Green River formation alone has recoverable reserves estimated to be triple those of Saudi Arabia, and that is just one of many shale formations around the world.

In April, Red Leaf obtained a permit to begin mining and recovering kerogen in a Uinta Basin section of the Green River formation.  However, late yesterday that permit was halted after an appeal from western US environmental group Living Rivers, which fears possible water contamination from the project.   Red Leaf appears to have agreed to the halt (which is just a hold, not a revocation).  Although there has been no comment from Red Leaf officials, reports are that they agreed to provide more data for analysis.

Oil shale has been just out of reach for decades, but the EcoShale technology appears to be the best hope ever of turning the resource from merely theoretical to profitable.  Accessing this resource is so important that it is crucial that we cross every “t” and dot every “i” early in the process, in order to make sure we can fully exploit it for decades to come.   Stay tuned for more details.

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China to restrict export of rare earth elements

June 25, 2012

Citing environmental concerns, the Chinese government has announced that it will restrict the mining and exportation of rare earth elements, crucial to the manufacture of modern electrical components.  China is currently the producer of over 90% of the global market in REEs.   Although some claim that this is a ploy by China to prop up REE prices, if it actually increases costs in China, then it should allow other nations to develop their own reserves and enter the market.  Although China has a near monopoly in REE production, it holds less than a quarter of known global reserves.

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“Think it possible that you may be mistaken.”

June 20, 2012

This is a bit off topic for this blog, but I am a fan of economist Deirdre McCloskey and I highly recommend her all too brief blog post from last weekend.  An excerpt:

Industrial policy, from Japan to France, has propped up failing industries such as agriculture and small-scale retailing, instead of choosing winners.  Regulation of dismissal has led to high unemployment in Germany and Denmark, and especially in Spain and South Africa.  In the 1960s the public-housing high-rises in the West inspired by Le Courbusier condemned the poor in Rome and Paris and Chicago to holding pens.  In the 1970s, the full-scale socialism of the East ruined the environment.  In the 2000s, the “millennial collectivists,” Red, Green, or Communitarian, oppose a globalization that helps the poor but threatens trade union officials, crony capitalists, and the careers of people in Western non-governmental organizations.

Yes, I know, you want to reject all these factual findings because they are “right-wing” or “libertarian.”  All I ask you to do is, once in a while, consider.  Don’t believe everything you read in the papers.

Be sure to read the comments for McCloskey’s dialogue with her readers.

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New book released on contemporary Geoeconomics

June 19, 2012

There is  a school of thought that economic matters are so fundamental in the era of globalization that geoeconomics has surpassed geopolitics in importance.  Personally, I take geoeconomics to be a subset of geopolitics, but that is just a matter of personal pedagogic organization.  Geoeconomics is a crucial area of study whether you think it is a subset of something else or a fundamental, stand alone subject.

Swedish economist Klaus Solberg Søilen’s new book Geoeconomics is now available for free download at Bookboon.com.   I have not read it yet, but I am familiar with other of Soilen’s publications and though I do not fully agree with him, I will read this new effort and recommend it to readers of this blog (especially at this price!).  Publisher’s description:

With the shift from geopolitics to geoeconomics the focus is no longer the Heartland or the Rimland, or any coherent geographical region, but the set of all geographical locations containing economically-important natural resources, what we shall call the Nareland (Natural Resource Lands). This new logic of dispersed geographical locations marks the shift from geopolitics to geoeconomics.

The centre stage has been taken over by the private-sector organization, the corporation. This means that power has been transferred from the public to the private sphere. It means that the nation state is ceding its power to individuals – less in some countries and more in others, for instance less in Sweden than in the USA; but the trend is clear, and it is global.

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Sri Lanka, China pledge military cooperation

June 8, 2012

The commander of the Sri Lankan army and China’s Minister of Defense Liang Guanglie on Thursday pledged to boost military cooperation.

China’s ‘String of Pearls’ strategy edges ever forward.  Although some insist that this policy is not dangerous, a Chinese military presence in Sri Lanka would be highly provocative.

Sri Lanka/China in 2012 is to India as Cuba/USSR was to the US in 1960.