Pipeline Will Change Oil Market

While America wondered whether Bo or Carrie would be the next “American Idol,” oil began flowing through a pipeline running from Baku in Azerbaijan through Tbilisi, Georgia and terminating at the Turkish port of Ceyhan. The BTC project may ensure that the energy-wasting American lifestyle can persist another few years.

The significance of the geography is difficult to overstate. This pipeline, which will eventually carry as much as a million barrels of oil a day to the Mediterranean, does not run through the unstable nations of the Middle East nor through Russia, a potential rival still to America. The Azeris are nominally Muslim, but not of the troublesome fundamentalist type, the Georgians are 80% Christian and have a pro-western government put in office by a people power rebellion, and Turkey is a member of NATO, an aspirant to membership in the EU, and historically, America’s best ally in the Muslim world (e.g., after the US, the largest contingent of UN soldiers in the Korean War came from Turkey).

Until the pipeline fills up (this could take a few months as it will hold 10 million barrels), the Russians and Arabs will continue to control the flow of oil in west and central Asia. However, once completely on-line, that 1 million barrels a day will give the west a cushion – non-OPEC, non-Russian oil.

There have been environmental and economic concerns in the construction of the pipeline. The local greens, although not as organized or as militant as in Germany or France for example, have protested the pipeline’s existence. One demonstration last Saturday resulted in a police attack on protesters – it is alleged they were too close to the pipeline. And there are economic worries about recycling the oil wealth into meaningful development and not into Swiss bank accounts.

The real concern, though, is the target the pipeline represents. The unrest in Nagorno-Karabakh in Azerbaijan and in South Ossetia in Georgia is cool at the moment. However, outright warfare has happened before, and without a permanent solution to the ethnic woes, it can happen again. The pipeline is vulnerable, and an attack on it would make these local difficulties matters of global significance. And Iraq isn’t far away. The BTC pipeline will change the oil market, but that isn't the same thing as bringing stability.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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