The mainstream media is full of headlines about Mexico. You already know Trump is rattling another cage.
Profit Watch sets its own sail. Our focus today is on Bulgaria, of all places.
A very significant development just happened here. I doubt one in ten thousand would see any significance.
What is it?
It’s this: Bulgaria just signed its first deal to receive US natural gas.
This may sound unremarkable. I think it’s huge.
The US energy boom is reshaping the geopolitics of Eastern Europe.
Everyone’s attention is on Trump’s attacks on China, Iran and Mexico.
And yet clearly, the US is fundamentally weakening Russia in its historic sphere of influence.
Bulgaria, like most of Eastern Europe, was, until now, entirely dependent on Russian gas.
Poland was too once. It’s been putting US gas deals in place even before Bulgaria.
Don’t underestimate how significant — and by this I mean bad — all this is for Russia. Its economy and government revenue are almost totally dependent on oil and gas.
Every bit of US gas that displaces Russia’s cuts off desperately needed income and market share.
We can see things playing out here in other ways…
The US is hijacking this plan
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Have you heard of Nord Stream 2? This is a project to deliver Russian gas via an undersea pipeline to Germany.
Let’s make one thing clear: Germany wants the gas. Russia wants to provide it. Sound good?
The US will soon pass a bill in parliament to put onerous restrictions on companies involved in laying the pipe.
What business is it of America’s? None that I can see.
But they’ll try and screw it up anyway. Perhaps the US would prefer Germany import US gas? Or do the Yanks just want to give Putin a hard time for the hell of it?
Truth be told, I don’t really know. But it seems to me that the US is stitching up Eastern Europe as its new playground.
Poland is in talks with the US to establish a permanent US military base there. It might even be called Fort Trump!
The Poles are happy to splash out for American F-35A jets and US energy.
We’re talking big dollars here. One F-35A jet costs US$90 million.
Last year, Poland handed over US$4 billion for a US Patriot missile defence system.
There’s no end to how long this kind of thing can run for…
The coming collapse of Russia
Here’s one thing we do know. The United States has a crazy amount of gas. In Texas, they burn the stuff just to get rid of it.
There’s no infrastructure in place to capture or transport it.
That will come if the US can export it around the world. Perhaps we might find it even ends up here in Australia.
Why do we care? This looks very bullish for the US over time, and probably for the world too.
Lower energy costs are a boon.
It does make me wonder about Russia. I remember reading George Friedman’s book The Next 100 Years: A Forecast for the 21st Century.
That came out in 2009 and predicted the collapse of Russia in 2020.
Will Russia collapse next year? I have no idea. But the forecast is on track, generally speaking.
Russia has terrible demographics and an economy based on an industry now in terminal decline: Fossil fuels.
This is one angle few people seem to think about when they wish for the oil industry to disappear. I’d be staggered if it didn’t set off a huge migration of desperate people.
Countries like Russia, Nigeria and Iraq have little else to offer the world market.
Once the oil is gone, so is their economy. That day is a way off yet, but that’s where the world seems to be heading. Think of it as a crisis for the future.
Australia won’t be immune to these changes. We earn a lot of national income from coal. Its days left are going to be even shorter than oil’s.
Last month, the UK National Grid went without using coal for the first time since the Industrial Revolution. It will be gone completely by 2025. Most other countries won’t be far behind.
All economies are built on natural resources, in some way. For now, watch US gas to encroach further into Europe. You’ll know what follows: A crumbling Russian economy.