Originally Published: January 9, 2006 4 a.m.
In recent weeks, a news story about Russia's natural gas feud with Ukraine crept through newspapers with little American fanfare.
When Russian leaders demanded that the Ukraine pay four-times more for natural gas than in the past, Ukrainian leaders refused. Russia immediately reduced its natural gas flow to Ukraine by 40 percent. The ensuing standoff resulted in a complex deal requiring the Ukraine to pay considerably more.
Russia's demand for higher prices came one year after Ukraine's "Orange Revolution," where Viktor Yushchenko the candidate America's trade hawks endorsed survived an assassination attempt and a rigged election to defeat a Russian sympathizer.
Russia is the world's second-largest producer of natural gas and petroleum, and the government owns 30 percent of those resources, and could soon own 50 percent. Russian leaders know that most of the European Union (EU) relies upon them for natural gas. After other western Europeans denounced Russia's actions, many revered European newspapers reflected fears that Russia would pull the same maneuver on the rest of the EU.
Unfortunately for global consumers, experts expect European leaders to get natural gas elsewhere in an effort to reduce their dependence on Russia. This could translate into more global dependence on the Middle East and South America.
A shortage of U.S. natural gas transfer stations and a tight global market has forced the price of natural gas to rise from Prescott to Pennsylvania during the past five years, and more demand on a shrinking global market could translate into higher prices.
Prescottonians, Arizonans and Americans should take this year's natural gas prices with a grain of salt. Unlike some other countries, at least we have the luxury of the Arizona Corporation Commission to protect us against exorbitant prices.
Like other countries, we may have little influence on the global market. Maybe warm, dry winters aren't so bad after all.