Shh! Why I secretly fancy Gazprom

A SENIOR bureaucrat has defended the move to spend more than $230,000 on senior staff leadership training within the Department of Economic Development.Department Secretary Norm McIlfatrick said management and leadership development was essential in any modern organisation and he believed strongly in strategic leadership development for his team.
His comments come after it was revealed the Government awarded a contract for $231,475 to high-profile consultancy firm Dattner Grant.
The contract was for a "highly conceptual and outwardly focussed leadership program for "emerging frontline leaders".
Mr McIlfatrick said criticism from Liberals' economic development spokesman Will Hodgman was "fundamentally flawed" as good leadership was essential to fulfilling the department's duty to provide Tasmanian industries and businesses with advice to grow the state's economy.

It got worse. A kindly environmental fund manager explained that fuel cells would soon be powering the entire future, not just cars. The hydrogen needed to power them would come from the wind and the waves and, above all, the sun, beating down on vast arrays of mirrors near somewhere called Boron in the Mojave Desert. Fossil fuels would be a dark smudge on history. So I did what any smart investor would have done. I went out and spent $5,000 more than I could afford, which is to say $5,000, on shares in a Canadian fuel cell company.

The first sign that this may have been unwise was the failure of dozens of excited forecasts of the death of oil to come true. These forecasts were based on M. King Hubbert’s theory of “peak oil”. Mr Hubbert, an American geophysicist of unimpeachable integrity, correctly predicted that domestic US oil production would peak around 1970 and go into steady decline as the US oil industry found more lucrative uses for its profits than ploughing them back into domestic oil exploration. Others used his methods to predict a global production peak in 2000 — but it didn’t happen.

Instead, with Adam Smith smiling thinly from his grave, fears that oil may be about to run out have so far translated swiftly into higher prices, funding a successful hunt for more of it. Hence BP’s deep-water rigs off the island of Sakhalin in the Russian Far East. And the ingenious bendy bore-holes on Alaska’s North Slope that vastly expand the Prudhoe Bay oilfield without needing a single new drilling rig. And the reclassification of Alberta’s 300 billion barrels of sticky, hard-to-get-at oil-sand oil as “recoverable”. And, in a roundabout sort of way, the fact that my fuel cell shares are now virtually worthless.

If only someone had recommended Gazprom. Yes, Gazprom. Because when oil failed to run out, it was left to 9/11 and concern about climate change, not the heady lure of hydrogen, to determine global energy trends. The lesson of the September 11 attacks for Western energy ministers was: end your dependence on the Middle East (and Gazprom is Russian). The lesson of climate change was: diversify away from oil and coal (and Gazprom sells gas). So a new energy future for Europe was mapped out, depending so heavily on gas that by 2030 the continent may be importing 80 per cent of its total requirement, with most of that coming from Russia.

Cause for concern? Not a bit of it. At least, not when Tony Blair signed off on an energy review three years ago that decided “there appear to be no pressing problems connected with increased dependence on gas, including gas imported from overseas”.

But then, last week, Vladimir Putin turned off the tap on Ukraine on the not entirely unreasonable ground that Kiev was paying a fraction of the market price. The immediate result was gas shortages as far away as France, as Ukraine tapped into the pipeline crossing its territory to siphon off what Moscow was trying to deny it. Almost as quickly the phrase “energy security”, hitherto a priority only for America, jumped up the European agenda. It will be debated today in the Commons. It will also be assiduously promoted, during the consultation period for a brand new energy review, by a revivified British nuclear lobby that can’t believe its luck at Mr Putin’s gaseous bluster.

The nuclear lobby will argue that only a brave new reactor-building spree can bridge the supposed gap between the energy Britain will need in 2050 and the energy it can reliably obtain from other sources. No 10 has already indicated that it likes the argument. But you don’t have to be a CND diehard — indeed, almost no one is any more — to see through it.

The clearest lesson of last week’s gas spat is that Russia needs its European gas customers almost as much as they need Russian gas. It was out of fear for his reputation as a reliable supplier to high-paying western Europe that Mr Putin turned supplies back on so quickly. He might wish to threaten us with Gazprom’s off switch as his predecessors did with nuclear Armageddon, but if we are sensible he won’t be able to.

“Sensible” here means boosting our gas storage capacity as an insurance against supply squeezes; investing in infrastructure to handle more liquefied natural gas, which is easily bought and transported from other sources because it can be shipped in tankers; and, above all, investing in energy efficiency. Subsidising loft insulations and low-energy lightbulbs may not be sexy, but neither is it hard, dangerous or necessarily expensive.

The right energy policy, for us as for the exploding economies of India and China, would keep the nuclear option but not rely on it. And it would promote efficiency and sustainability over prolonging our dependence on ever-costlier oil. Because sooner or later, it will run out. Oh, happy day!