Friday, September 12, 2008

A Wake-Up Call, From Russia with Love

The New York Times recently reported that “soaring global food prices (the price of wheat alone rose 77 percent last year) and a new reform allowing foreigners to own agricultural land . . . have created a land rush in rural Russia.” The article quotes Russia’s minister of agriculture, Aleksey Gordeyev, noting that he often speaks “of food in terms of national security. ‘Russia is very often perceived throughout the world as a major military power,’ he told a food summit in Rome early in his tenure. ‘At the same time, and perhaps above and beyond anything else, Russia is a major agrarian power.’”

In addition to agricultural and military power, Russia is a major player in energy circles. According to the Energy Information Administration, “Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. Russia is also the world's largest exporter of natural gas, the second largest oil exporter and the third largest energy consumer.”

The recent dramatic rise in food and oil prices has placed Russia -– a country experiencing (and causing) significant turmoil -- back in a position of significant power. This provides yet another problem area that is exacerbated by America’s continuing need for vast amounts of oil.

The Russia-Georgia conflict, combined with issues in Iran and Venezuela — which are driven at least in part by oil — should be a wake up call that energy independence needs to be more than just a sound bite. If we are serious about energy independence, we need to look at our infrastructure, our resources, and our capacity for change. It is this last issue that raises the biggest concern.

My connections to two of the great flood cities of America — New Orleans and Grand Forks, ND — make me particularly aware of the need to heed the warnings of impending catastrophe and to prepare for the worst. (My best wishes to those in the path of Hurricane Ike.) From an energy perspective, our recent bout with $4+ per gallon gas was a near miss. Just because we weathered the storm, it does not mean we are in the clear. It simply means we have a little more time to prepare for the “big one.”

Update: In some parts of the country, like Michigan, $4 gas has returned.