Energy Matters: Putin and the Law of Unintended Consequences

It has been an interesting couple of weeks in politics.

And for those of you who immediately start to think about the seemingly endless squabbles between Premier Craig Cannonier and the Leader of the Opposition Marc Bean, I’m not talking about the micro politics of our little rock in the ocean. 

The politics that have caught my attention centre on the aggressive military actions of Russian President Vladimir Putin, who, in the words of German Chancellor Angela Merkel, “has lost touch with reality and is living in another world”. 

Putin’s recent annexation of Ukraine’s Crimea (a diamond shaped peninsula in the Black Sea) is at the centre of the worst East-West standoff since the Cold War.

President Putin’s actions seem to be part of a well-planned and carefully-orchestrated strategy to rebuild Russian global influence. In the words of former US Defense Secretary Robert Gates, the taking of Crimea appears to be part of Russian President Vladimir Putin’s long-term strategy of creating a Russian bloc that includes full control of Ukraine, which last month ousted its pro-Russian President Viktor Yanukovych.  

House Intelligence Committee chairman Rep. Mike Rogers added: “He wants to be a world influence, and if he has to do it through brute force, he’s going to do it. We shouldn’t underestimate the kinds of things that he will do that he thinks are in Russia’s best interest.”

What I find particularly interesting is how President Putin’s actions in a part of the world — that let’s be honest — most of us are a little geographically vague on have an almost instantaneous effect on some of the most important energy issues we are currently facing. This is often referred to as The Law of Unintended Consequences and demonstrates how interconnected and global a world we now live in.

Just this weekend we were reading about the move by BELCO to seek approval from their shareholders to convert their Power Plant to burn liquefied natural gas (LNG) rather than heavy fuel oil and diesel. 

One of the pre-requisites to achieve this goal is for the US to approve the exportation of LNG to countries outside the North American Free Trade Agreement (NAFTA).  

In a direct response to the Russian escalation in Crimea, House Budget Committee chairman Paul Ryan joined in the largely Republican-led call and urged the Obama administration and Congress to speed up the process for US companies to export liquefied natural gas, particularly to western and central Europe, which depends on Russia for their supply.

In another unexpected twist, billionaire entrepreneur Elon Musk, giving testimony before the Appropriations Subcommittee on Defense, pitched his wares. That included enormous rockets capable of carrying high-tech cargo into space, better known as the SpaceX project. 

At stake is tens of billions of dollars in business in launching satellites for the US government. Mr. Musk argued that his competitor, ULA, a joint venture of Boeing and Lockheed Martin, use Atlas rockets that rely heavily on a Russian main engine to bring their spacecraft to launch.  “The Atlas V cannot assure access to space when it relies on President Putin’s permission to enter space” said Musk who pointed out that SpaceX rockets are “truly made in America”.

Mr Musk also just happens to be the man behind Tesla Motors, which manufactures the world’s most advanced and luxurious electric vehicles; Solar City, the largest provider of solar systems in the United States; and PayPal, to name just a few of his other ventures. 

It seems safe to assume that if Vladimir Putin’s aggressive actions in the Crimea result in billion dollar space contracts for the US government being awarded to Elon Musk, then Tesla, the world’s highest-tech electric vehicle manufacturer and Solar City will also be major beneficiaries which from an energy perspective is in my opinion a most beneficial (albeit unintended) consequence. 

Nick Duffy is the divisional manager for Bermuda Alternate Energy. Comments and suggestions may be sent to [email protected]