Poland’s Tusk Proposes Energy Union to Break Russian Hold on Gas

[FarCenter]

Polish Prime Minister Donald Tusk proposed a Europe-wide energy union, including a single body charged with purchasing gas supplies, as a means of breaking Russia’s “stranglehold” over the region’s energy market.

In an op-ed column published in today’s Financial Times, Tusk called for the creation of a European Union institution to negotiate energy contracts with Russia. Member states should also work more closely together on energy infrastructure to guarantee the security of supplies and look to better exploit fossil-fuel resources, he said.

“Excessive dependence on Russian energy makes Europe weak,” Tusk said. He cited the dependence of at least 10 of the EU’s 28 members on Russian state-controlled gas exporter OAO Gazprom for more than half their consumption.

http://www.bloomberg.com/news/2014-04-22/poland-s-tusk-proposes-energy-union-to-break-russian-hold-on-gas.html

Energy is too important to society to be left to the free market.

[jakeXT]

1. Sounds like a plan to force countries like Germany to act against their interests /nt

[dipsydoodle]

4. He's biased by the fact

Poland's gas comes via Ukraine : not Nord Stream which supplies Germany. Slovakia is in the Ukraine boat too.

[The Magistrate]

2. He Is Quite Correct, Sir

Russia's willingness to use energy exports as a political tool has great potential for long-term harm to Russia's position as a supplier. It is one thing to jack the price when one is in the driver's seat; that tends to be self-correcting over time by making other sources economically viable, and one can then trim the price to make these less feasible and regain lost market position. But when one raises the price or reduces availability as a species of whip-crack, to get something done, people will not only find and make other sources viable, they will be inclined to stick with them, even if one should later lower the price or open the taps again. The extra cost will be paid as an insurance premium against interruption by an unreliable supplier, and even as an expression of resentment against an exploitative meddler.

[dipsydoodle]

3. Implicit in that is that Europe would need to buy gas on the spot market.

Tusk doesn't say how he thinks that might be managed in terms of settling the contracts.

He might be better off sticking to Fleetwood Mac and letting the adults sort out gas issues.

[FarCenter]

5. The real issue is OPEC and the Middle East

As US production reduces our imports, some other buyer has to be found for the production of our allies on the Persian Gulf and to continue Anglo American control of the sea-borne trade in energy. So reducing Russian output and shifting EU purchases towards the Gulf makes a lot of sense for US foreign policy.