An uncertain energy future in the US, while Turkey puts pressure on Greece
It would seem that some energy analysts at Citi have reverted to childhood and revisited their copies of ‘Alice in Wonderland’.
The Lewis Carroll classic certainly springs to mind when they suggest in a new report that North America could end up becoming a major energy hub of Mideast proportions by 2020.
Now admittedly, “Energy 2020: North America as the New Middle East,” fights its corner under a best case scenario and does take into account the domestic shale oil story, which is already a ‘known quantity’.
It also notes that high prices over the last 10 years have driven a major increase in capital expenditure in the oil industry – the result being a massive surge in oil discoveries.
Even so, the numbers still make for startling reading. Canadian, US and Mexican oil and gas production is set to add 11mbpd (to 27.6mbpd) over the next 10 years, with the direct and indirect creation of 3.6m jobs.
It could also increase real US GDP by 2 percent-3.3 percent ($370bn-$624bn) through a combination of new hydrocarbon production and multiplier effects across the economy at large.
But here’s the major caveat – the numbers assume that environmentalists won’t gain the political upper hand in the US.
Given the increasing likelihood of Obama (hardly a friend of the domestic energy industry at the best of times) facing off in November against either a candidate whose policies are based almost solely on his religious views or a candidate who changes his policies as often as most people change their underwear, don’t bet against the tree huggers assuming the ascendancy after His Saintliness has completed his victory lap.
If the Battle of Thermopylae in 480BC proved to be a defining moment for Western civilisation as 14,000 Greeks – led by King Leonidas – resisted an estimated 175,000 Persians for seven days, 21st century Greece finds itself in an entirely different scrap as it struggles to maintain its economic credibility as a nation state.
The portents aren’t good. Beholden to the EU-ECB-IMF troika/collection agency, Athens is increasingly having to deal with Turkey – its modern day arch enemy from the east – as it looks to pay down its debts by raising €50bn ($66bn) through an open-ended programme of privatisations and concession sales.
In the latest phase of the great sell-off Greece’s privatisation agency, the Hellenic Republic Asset Development Fund, has announced plans to sell 500,000m² of seafront real estate on the island of Corfu and up to 1,858,000m² of land on Rhodes, including an 18-hole golf course.
More eye catching however has been Greek officials actively courting Turkish investors. Turkey’s Global Investment Holdings meanwhile has already reportedly been looking at energy and infrastructure investment opportunities.
In reality, the Greeks and Turks have been doing business for some time. What’s different this time is that the economic landscape has shifted decisively in favour of the Turks – latest figures showing Turkey’s economy growing 8.2 percent y-o-y through Q3 2011 while Greece – now in its fifth year of recession – shrank by 7.5 percent y-o-y through Q4 2011.
In a nation where many in the religious establishment still customarily refer to Istanbul as Constantinople, the thought of going cap in hand to the Turks must almost be unbearable to take.
Leonidas, meanwhile, is probably spinning in his grave.