By: Meir Javedanfar
16/08/2008
The recent conflict between Russia and Georgia, is likely to have a notable impact on their Beyond Oil futures.
Until today, Georgia has been an interesting case. The country does not have oil resources of its own. However it earns a major part of its income by allowing energy pipelines to transit through its territory. One of the most notable projects has been the Ceyhan-Baku-Tbilisi pipeline. One of the advantages of this western backed pipeline was that it avoided Russian territory, thus reducing Russia's existing dominance over the energy market in the Caucus. However, with the recent conflict, and the instability which has been brought as a result of it, Georgia may lose part of its attractiveness as a suitable transit point.
This point becomes evident after reports that one of the main reasons behind Russia's overwhelming use of power, which included attacking pipelines in Georgia, was in order to hurt Tbilisi's standing in the energy markets.
On the other hand Russia who is also an energy producer, in the long run, may also lose customers. This is because after its muscle flexing in Georgia, and the start of what seems to be difficult times between Washington and Moscow, less countries may wish to become dependent on Kremlin as an energy resource.
However one bright spot in all this may be that it may spur under countries, especially the US, to invest more into their renewable sources of energy, despite the serious challenges ahead in the Congress. One hopes that this could have been a serious wake up call for them. Until then, the Beyond Oil future of a number of oil producing countries, and even more oil consuming countries, will be at the mercy of unstable regions and even more unstable political situations.
End of Analysis
Meir Javedanfar, alongside Gordon Wollgam, is Project Manager and founder of the Beyond Oil project (http://beyondoil.net)
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