Alarmism of the Future!

Matt Yglesias and Brad Plumer are talking about oil's impact on the collapse of the Soviet Union. Piffle. Those discussions are so 1993. The real cutting-edge blogger-alarmism is over natural gas, of which over half the known reserves are in Russia and Iran. Which is why we should be so remarkably unhappy that Tehran and Moscow have been slowly, carefully, and happily drawing closer to each other -- that's bad stuff. We're going to be needing natural gas, more than anything else it has the potential to soften the changeover from oil -- many call it a "bridge fuel". But America's natural gas reserves have already peaked, and while there's an enormous amount of the stuff out there, it is, if anything, in worse spots than oil. Concentrating so much of it in autocratic Russia and anti-Western Iran is really a recipe for trouble. It gives Russia cause to defend and protect Iran because the two together can dictate the market, and it gives Iran room to be, well, Iran.

In all the criticism of the Saudi-American relationship, few realize quite how well it's served us. By acting as guardian for the world's primary oil producer, we've been able to control, to a large degree, OPEC's vicissitudes, because the only country with enough oil to counterbalance the others believes their survival rests primarily on our good intentions. Replace Saudi Arabia and Kuwait with Iran and Russia and things get hairier. Neither country owes us anything, Russia is far too big to kick around, and Iran's government hates us with a fury few can match. So not only can't we push around the market but neither of the major producers have our best interests (even if for selfish reasons) in mind.

Better yet, watch China real close here. On oil again, we've always had favorable terms and the best deals because of our special relationship with Saudi Arabia. But hold just a second -- Iran and China, pretty chummy, no? Russia and China, no bad blood there, right? China's a massive customer who can be easily played of the US to enrich Russia, Iran and to force us to buy on their terms. Over the last few decades we've been such a crucial consumer of oil that the market reacted to us as much as the producers. OPEC had limited leverage (we broke them in the 70's) against the US because there was no massive buyer to run to if you stopped selling to us. With China's development moving ever quicker, they're going to want some electricity over there. Which means some natural gas. Which means a lot of it. Which means we're not the only game in town anymore.