Oil-The "Hook" In The Bear's Mouth?

Oil is without doubt humanity’s most important natural resource. When petroleum was first distilled in the 1800s, it was used as lamp oil and as lubrication for machinery. Over time, thousands of new uses have been found for oil. We have become so dependent on black gold, our Industrial Age would come to a complete standstill if the oil wells were to suddenly run dry.

The scarce nature of oil has made it the catalyst of dozens of military conflicts. About 80 percent of the world’s readily accessible reserves are located in the Middle East. It should come as no surprise that the Iran-Iraq, Gulf, and Iraq wars were all fought over oil.

The economic importance of oil is not lost on Russian President Vladimir Putin. Since coming to power in 2000, Putin has made restoring Russia’s strength his central goal. He has not been shy about using his nation’s energy supplies as an economic billy club against his neighbors. In 2009, Putin turned off gas supplies to pipelines to Kiev in the dead of winter leading to freezing cities across Eastern Europe as Russian gas stopped moving through Ukranian pipelines to other nations.

In recent years, he has worked diligently to turn his nation’s oil and gas wealth into a strategic advantage. A likely reason why Putin decided to back the much hated Syrian dictator Bashar Assad (after it became clear he had used chemical weapons against his own people), was because of the flow of energy. If a pipeline was to be built to supply the West with Iraqi or Iranian gas, it would have to go through Syria.

Putin’s latest strategic move came last month. China and Russia’s state owned energy giant, Gazprom, signed a $400 billion gas deal that will allow Russia to shift away from Europe. signed a $400 billion gas deal that will allow Russia to shift away from Europe.

Since Europe accounts for about 50 percent of the Gazprom’s revenues, the inclusion of China would allow Putin to thumb his nose at sanctions imposed as payback for the Russian takeover of Crimea.

When it comes to China’s energy usage, time is on Putin’s side. In 1980, Chinese oil consumption was at 2 million barrels per day (bpd). Today, it consumes over 10 million bpd. By 2020, its daily usage is expected to rise to the 18 million bpd.

Another way Putin has made himself immune to sanctions is by signing massive development deals with a host of Western oil firms. In the past few week alone, just about every Russian oil and gas company has signed a major deal that further integrates it with the rest of the world. Once a company spends billions to help Russia bring a remote oilfield online, they can’t afford to walk away from the project. Here are some of the deals:

1. Rosneft and BP formed a joint venture to explore in the Volga River Basin.
2. Lukoil and Total formed a joint venture to explore in western Siberia.
3. Rosneft and ExxonMobil inked a $400 billion exploration plan for Russia's arctic.
4. Rosneft contracted all of North Atlantic Drilling's fleet.|
5. Novatek signed a 15 year LNG supply deal with China National Petroleum.

U.S. foreign policy on oil has been adrift for the past several years. Washington DC sits idly by while Russia and China lock-up vast areas of the global oil reserves. A key reason for this lack of motivation is the belief that the ongoing fracking-led oil boom will driving America toward energy independence by around 2030.

The International Energy Agency (IEA) originally came up with this projection, but there is now great doubt about their numbers. Last month, the IEA suffered a huge embarrassment when it downgraded the potential amount of shale oil reserves in California by 96 percent. Just last week, they added a huge price tag to what it would take to make 2030 a reality. The IEA estimated that $48 trillion dollars would need to be invested to meet energy needs. There is no way we could raise this amount of money without pushing the cost of oil sky high.

The discovery of 100 trillion cubic feet of natural gas beneath the Israeli controlled waters of the Eastern Mediterranean could disrupt Putin’s plan to control the energy market. The Russian leader will obviously do everything in his power to prevent Israel from entering the market in Europe. Envy over Israel’s gas discoveries could be the “evil thought” that gets Russia involved with the Muslim coalition that Ezekiel said will attack Israel.

“Thus saith the Lord GOD; it shall also come to pass, that at the same time shall things come into thy mind, and thou shalt think an evil thought: And thou shalt say, I will go up to the land of unwalled villages; I will go to them that are at rest, that dwell safely, all of them dwelling without walls, and having neither bars nor gates, to take a spoil, and to take a prey; to turn thine hand upon the desolate places that are now inhabited, and upon the people that are gathered out of the nations, which have gotten cattle and goods, that dwell in the midst of the land. Sheba, and Dedan, and the merchants of Tarshish, with all the young lions thereof, shall say unto thee, Art thou come to take a spoil?” (Ezekiel 38:10-13a).

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