Wednesday, August 13, 2008

In the Pipelines...

LONDON (AP) — BP PLC said it shut down an oil pipeline that runs through Georgia on Tuesday as a precautionary measure, but added that it is unaware of any Russian bombings on pipelines in the region.

BP said the 90,000-barrel-a-day pipeline to Supsa on Georgia's Black Sea coast from Baku in Azerbaijan will remain closed indefinitely."

A few days ago I mentioned the pipeline running through Georgia. I said, "wars break out near oil, wars break out other places too" -- or something like that.

Honestly, at the time, I thought it was coincidence. The pipelines were not mentioned in the first reports that I remember -- I sort of thought it was a case of -- look closely anywhere and you will find oil.

It seems different today. Here's an excerpt from an editorial in the Washington Post by Steven Pearlstein. It's a great column, with a lengthy and interesting, if rather opinionated history of the pipeline.

"Putin understands better than anyone that oil and gas are the source of Russia's resurgence as a military and economic power and his own control over the Russian government and key sectors of its economy. It is oil and gas that provide the money to maintain Russia's powerful military, along with a vast internal security apparatus and network of government-controlled enterprises that allow the president-turned-premier to maintain his iron grip on the levers of political and economic power.

A little pipeline history: It was just as Putin was coming to power in 1999 that an agreement was reached to create the Baku-Tbilisi-Ceyhan (BTC) pipeline. The project would allow Azerbaijan and its production partner, BP, to bypass Russia and transport their newly drilled oil instead through Georgia and Turkey to a port in the eastern Mediterranean."

I think it's interesting to note that the dollar, which was rising slightly on news of oil dropping, dropped on news of its rising after the bombing...

Meanwhile, here's the last paragraph in the Wall Street Journal's Market Watch story about the ceasefire:

"The United Nations refugee agency, UNHCR, estimated that some 100,000 people have been uprooted by the conflict in South Ossetia and Georgia. The agency's first airlift arrived in Georgia Tuesday morning with 34 tons of emergency aid for people affected by the fighting."

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