Its a small world after all

By Keith Heyde

This last month has been rather tumultuous time for the world of energy.

First, let us turn our attention to Norway. Norway is usually one of the more passive players in the oil industry, especially when contrasted to the constant political turmoil that riddles many of the Middle Eastern producers. However, over the past month, Norway showed how, despite relative political security, the internal politics within a nation can have monumental impacts on the events of the world oil market.

For those of you who have not been keeping up with development, Norway experiences a worker’s strike. The strike’s origins have nothing to do with the oil supply, but rather with the pension quality. To paraphrase, workers demanded that they should have full pension rights upon retirement at age 62. This, coupled with a push for a retroactive empowerment of such demands, would cause the Norwegian oil manufacturers millions of additional payouts.

However, a strike is effective when it has the capacity to cause truly widespread implications. In the case of Norway, the oil strike shot prices of oil up to $102/b which returned to “Middle Eastern comfort” levels.

What do I mean by Middle Eastern comfort? Well, for starters there are some countries in the Middle East, under a lot of pressure today, that rely heavily upon the high price of oil to fund social projects within the country. Saudi Arabia is, of course, ruled by a monarchial regime that is overwhelmingly dependent upon social programs to please its, often antsy, population. When the price of oil drops down, these social programs do not have the funding they require, and thus create the potential for yet another ‘Arab Spring’ incident to ensue.

Certainly Syria can understand how the price of oil can detrimentally impact the proceedings of a country’s ruling regime. Undoubtedly, Mr. Assad and company would benefit from the spending hike that would come from a higher price of oil.

And that doesn’t even get into the issues with Iran… now that the EU has revoked its insurance on shipping vessels; Iran is strapped for every dollar it can get. Without a significant land line to any major customer, and only China willing to deal with Iran in its new, exiled capacity, Iran was hurting. However, the strike in Norway has increased oil demand in Eastern Europe fringe states, that has consequentially benefited the Iranian cause.

It’s interesting how some disgruntled Vikings have an impact on Nuclear developments in Persia.

However, not to overshadow all of the international energy news with Norway, there was some rather significant developments in Australia over the past couple of months. Essentially, the government down-under is passing a bill that would increase the tax levied on any mined product in Australia. Although the current taxation rates are very low, the increase would represent a serious cut into the mining proceeds. Cuts could be upwards to 45%.

These new taxes could have big implications on the coal market within the Asia-Pacific region. Especially in some of the lesser developed island nations, coal is playing an increasingly large role in the development process. Without cheap and viable coal, deforestation and other bio-agri issues could result.

The energy world is beautiful and interconnected. To stay up with all your energy thoughts and news check back to www.energygridiq.com today.