Europe needs a reverse oil shock
A great game of pipelines can revive Europe's once great industrial might.
Europe’s industry is reeling from the high energy costs caused by the Green deal, the nuclear phase-out and the loss of cheap pipeline oil and gas from Russia due to the Ukraine war.
Europe has 4x higher energy prices than the rest of the world which is dismantling our wealth and mostly our industrial might.
This is highly problematic as not only do we need the jobs and revenue that industry brings but we very much need our industry to exert hard force.
1973 Oil shock
In the aftermath of the Yom Kippur war, the Arab countries managed to overcome their mutual distrust and formed OPEC which started an oil embargo reverting a post-colonial reality where the West was buying oil and gas at near-production prices.
The world never went back even as oil and gas exploration and technology greatly improved and OPEC losing its relevance as more and more oil and gas was found.
Europe is surrounded by oil and gas wealth
There is enormous amounts of oil and gas in the middle east that is unexplored.
Many of the blocks that are in production do not have a connection to the European pipeline system and this is not a coincidence.
Europe wants pipelines
The incentives are quite simple, you can pump your oil or gas directly to Europe, skipping transportation costs related to tankers and the pricing volatility of the global market.
For Europe, pipelines are better because you typically buy the oil and gas through very long-term contracts which is cheaper and has no pricing volatility.
Europe will always buy first from pipelines and then if it still needs more it will buy from the global market.
Pipelines to Europe are a captive market.
This allows Europe pricing power because pipelines only run in one direction, however as we learned during the Ukraine-Russia war it is very unwise to have producers have a monopoly on your gas supply.
Pipeline producers are highly incentivized to restrict other producers from building pipelines to Europe
After all, who wants competition?
Should Europe be able to freely choose which pipeline gas to buy, it would have enormous pricing power.
Pricing power from multiple pipelines are the main reason there is no peace in the middle east
The incentives are quite simple, if you are one of the lucky countries that have a pipeline connection to Europe (Turkey, Algeria, Libya) then you can pump your oil or gas directly to Europe, skipping transportation costs related to tankers.
The moment your neighbours can do that too, you lose negotiation leverage and you lose pricing power to the point that you might be pumping oil and gas and selling it at cost.
Turkey has one of those pipelines to Europe and is dreaming of a future where all oil and gas pipelines run over Turkey.
Netanyahu recently said that “some people dream to restore the Ottoman empire but they should forget about it”.
This is clearly a reference to Old Ottoman practices of being in control of the silk route which is what made the Ottoman empire rich.
Turkey is trying to monopolize oil and gas routes into Europe.
You can see it in why it supports the islamist regime in Syria as Syria is a key transit route for oil and gas pipelines from Turkey to Saudi Arabia and Iraq.
Turkey is funding the unity government in Tripoli too, to prevent the Tripoli-Italy pipeline from being used.
Turkey is arming any group that is useful to stop pipelines from being built.
Algeria has monopolized oil and gas routes to Spain
It is funding separatism in the Western Sahara, preventing Marocco from connecting to Mauritius where significant oil and gas has been detected.
Morocco has a pipeline to Spain but it is cut-off from oil and gas as this gas used to come from Algeria.
Spain is refusing to connect to France but it has invested in oil and gas infrastructure in Turkey
It’s very suspicious, especially as Sanchez is enrolled in many! corruption cases and is the only government that refused to increase its NATO spending to 5%.
The Spanish government is most likely corrupted by Turkey and this is part of why Algeria and Turkey aren’t fighting. Algeria and Turkey divided Europe into distinct energy spheres of influence.
The Venezuela solution: Sea blockades
Starting with Libya, it makes sense to blockade the entire coastline. Not just because of migrant boats but because you can prevent oil tankers and pipeline gas from leaving the country.
Turkey controls Tripoli and the transition government but it is actually defending the pipeline. The other party (Haftar) is supported by Egypt and Russia (who also wants to block the pipeline), Saudi Arabia and others that benefit from other pipelines.
The entire country lives off oil and gas though, so blockading it would lead to rapid resolution of the conflict.
The regime can then be coerced into giving up control of its oil and gas infrastructure and enable the construction of new pipelines.
This can be repeated for Algeria.
Before the reverse oil shock pipelines:
After the reverse oil shock pipelines:
Now, you can see that not a single country is a bottleneck for oil and gas. It can be routed around in all cases.
Producers have no more negotiation leverage.
There is no more incentive to fund jihadis either to fight the governments and prevent construction of pipelines.
There is still incentive for price cartels like OPEC but a blockade would break such a cartel immediately. As I said, they no longer have negotiation leverage.
The end-result is that Europe can buy oil and gas at production prices, firmly reversing the 1973 oil shock.
This would create an enormous sustainable competitive advantage over China, who needs to buy on the international market while Europe has a completely captive market.
This will directly translate into industrial competitive advantage that no other region can replicate, creating a solid Europese industrial source of hard power.
It is a deeply humanist policy despite it leaning into colonial methods
The policy is slightly colonial in nature during construction, but once the pipelines are in place the region will stabilize and the populations can converge towards democracy as there is no longer an incentive for outside countries to fund armed groups but there’s also no income stream that can sustain a petro-dictatorship.
This will remove reasons for immigration and create a sustainable economy that can lead to organic return of the regions population, currently seeking their future in Europe.