Journal of Energy Security

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Smogagedon in China

Many of us have nostalgic memories of waking up on winter mornings to welcome news of a snow day, allowing us to skip school or stay under the blanket for a few more precious hours. As temperatures drop in the Chinese mainland, schoolchildren there have become acquainted with their own version of a snow day: The smog day, which occurs when schools and workplaces shut down due to hazardous levels of pollution and heavy haze. But you can't make smog angels. Indeed, citizen discontent at China's off-the-charts environmental degradation is quickly growing into a potential menace to the ruling Communist regime. Issues like unmet demand for political rights are no longer the party's only existential threat -  See more here.

Korin on OPEC

Turkey Adds to Complex 'Tapestry' of Oil Risks'

CNBC reports:

An escalation in Turkey's most violent anti-government protests in years may complicate an already tense backdrop for energy security in the Middle East, possibly adding to the risk premium in benchmark oil prices, strategists told CNBC this week. 

Although Turkey produces only negligible quantities of oil and natural gas, the country represents an "energy crossroad" – Russian energy exports from the Black Sea port of Novorossiysk flow though the strategic Turkish Straits to markets in Europe and the U.S. Turkey is also an important conduit for oil transported via pipeline from northern Iraq.

Approximately three million barrels a day of crude oil and refined fuels flow though the Bosporus and the Dardanelles Straits "so any disruption of traffic would mean losing the equivalent of Nigeria or Venezuela," said Gal Luft, co-director at the Institute for the Analysis of Global Secu...

To Drill or Not to Drill: How Will Saudi Arabia Respond to the American Oil Boom?

"The coming American oil boom is bad news for Saudi Arabia. How the kingdom responds could very well determine if it survives. Current trends in the global energy market don't look good for Saudi Arabia. First, the International Energy Agency projected in November 2012 that the United States will surpass the Gulf petrogiant as the world's top energy producer by 2020. Then, last week, it revealed that North America, buoyed by the rapid development of its unconventional oil industry, is set to dominate global oil production over the next five years. These unforeseen developments not only represent a blow to Saudi Arabia's prestige but also a potential threat to the country's long term economic well-being -- particularly in the post-Arab Spring era of elevated per-capita government spending. Saudi Arabia's response, to drill or not to drill, will also have major repercussions for a world ec...

The Break Even Price of Oil

The Break Even Price of Oil

The importance of what we term OPEC's "break even price of oil" was a key message in our recent book, Petropoly: the Collapse of America's Energy Security Paradigm .  The break even price is the price of oil required to balance the budget of Saudi Arabia and other OPEC countries.

If you've read Petropoly you were thus not surprised by recent reporting that the price of oil Saudi Arabia needs to balance its national budget is $94 per barrel, while Iran requires $125, nor by comments by Ali Aissaoui of the Arab Petroleum Investments Corp that "OPEC will definitely need to cut production to shore up prices as they can't produce at prices close to their break-even level."

As we explain in Petropoly, when non-OPEC countries drill more, if the slack isn't taken up by developing world growth in consumption, OPEC drills less in order to tighten the supply/demand relationship and send prices back up...

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US Energy Security Council RT discussion

New Books

Petropoly: the Collapse of America's Energy Security Paradigm
Energy Security Challenges for the 21st Century

"Remarkable collection spanning geopolitics, economy and technology. This timely and comprehensive volume is a one stop shop for anyone interested in one of the most important issues in international relations."
U.S. Senator Richard G. Lugar

"A small masterpiece -- right on the money both strategically and technically, witty, far-sighted, and barbeques a number of sacred cows. Absolutely do not miss this."
R. James Woolsey, Former CIA Director

"The book is going to become the Bible for everyone who is serious about energy and national security."
Robert C. McFarlane, Former U.S. National Security Advisor
Russian Coal: Europe's New Energy Challenge