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Russia shot itself in a foot
Russia shot itself in a foot last year when in dispute with Ukraine, it shut off natural gas supplies to Europe. That experienced was very unpleasant for Europe and underlined its dependence on a single nation.
Now it is paying the price for it for its shortsightedness. Germany was going to phase out use of nuclear power plants by 2022. Nuclear power is a source of 23% of German electricity. However, Chancellor Merkel promised to extend the use of nuclear power. Though you won't find this in an official announcement, you'll have to read between the lines, Germany doesn't want to be held hostage by Russia. Unfortunately Russia will be paying the price for last year's actions for a long, long time as more European nations will be looking for different (more stable) suppliers of natural gas and for alternative energy sources.
Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007). To receive Vitaliy's future articles my email, click here.
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Agreed. Nuclear power is an electrical solution, not a heating solution.
This makes no sense, the German-Russian dispute was not over electricity, but over gas which most Germans use in their homes as heating, cooking commodity. Russia, didn't shoot itself in the foot, quite the opposite. It showed the Germans and the rest that it means business. Also, and as far as i know, gas is waaaaaaaaay cheaper than electricity.
Agreed (with CB). If Europe thinks it can find an inexpensive substitute to the Russian gas, it's delusional.
Russia did shot itself in a leg by failing to do what the Chinese did, attract western capital & technology to its relatively educated but cheap labor force to become an assembly line for the Western Europe, especially Germany.
As previously pointed out, it doesn't matter how cheap Russian gas is. If the supply isn't stable to certain countries then it's worthless to them.
It's the same problem with the USD, it's just taking a little longer to resolve (hope springs eternal, haaa!).
That's why Russia is building a new underwater pipeline from St. Petersburg to North Germany.
What was the point of this stupid post besides Russian bashing?
correction: it's begun building it back in the times of exuberance. instead of reconciling with the baltics it opted for an expensive way of showing how much it couldn't care less about reaching consensus with countries.
fyi, the pipeline is seen very much as a burden now. but you pay the price when your found econimic plans on political statements.
+10
Thanks anon, the OP is a slowpoke.
Good thing Russians love building nuclear reactors as much as making Ukranians shiver.
Russia has plenty of problems afoot...huge natural gas reserves are now affordably available in many coutnries including US in places like PA, via new drilling techniques which will only get more efficient as various companies make more money from drilling natural gas...and then there is oil...remember when oil wsa $20/barrel in 2002, is the world economy consuming so much more oil in 2009 thatn 2002?!?! are oil producing states really producing less than in 2002?!? Granted the US dollar has gone down, but still don't fundementals beg for something more like $30-40. Not that oil has to match fundementals in short term. Even if economy/population bigger in 2002, consumption of oil has to be way down with more fuel efficient cars, alternative energy comeing on line, consumers becoming greener etc...so where is the increase demand, decrease supply?!?
There is a bunch of wealth out there just sloshing around the globe between stocks, currencies, oil, metals, etc...forget fundementals and just try to stay ahead of the front of the nexgt tsumani of wealth moving to the next "thing" in investment.
However, if you are Russia, not to great to realize that you are about to hear the giant sucking sound of the wave receding and moving to other shores...
I don't understand why countries are phasing out nuclear power. It is a legitimate way of getting away from their dependence on oil (aka russia).
Don't punish the Europeans for Ukr. transgessions
So what was Russia supposed to do, say to Ukraine "it's alright to steal gas and please do it again?"
Thank you sir. May I have another!
Yeh, bit of a dicksky more. Could explain why Natural gas totaly plummeted thoughout summer