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Unanticipated Energy Consequences in the “City of Light”

by | published January 30th, 2017

Marina and I are flying out to one of our favorite cities tomorrow – Paris. You’ll be getting the next Oil & Energy Investor from there.

Paris is one of our main locations to relax and recharge. Over the past several years, it has likewise become a primary site for my meetings with financial and energy trend setters in an increasingly challenging market environment.

Once again, I find my stay divided. It has become an ongoing personal “tale of two cities.”

Upon each arrival, Paris contains what I expect and what has been necessitated by very recent changes in the energy terrain. As veteran Oil & Energy Investor readers well know, these revisions have sometimes occurred while we were in the air.

It’s going to be that way again.

Because recent events in Washington have been changing the agenda in Paris, thanks to some “unanticipated consequences” from the latest White House moves…

White House Moves are Rearranging Global Energy – and Not in America’s Favor

There are a couple of traditions on how Paris obtained the urban epithet “City of Light(s).” One comes from the seventeenth century and reflected the city’s central positon in the rise of “The Enlightenment.”

Another emerges from the early eighteenth century and a police request that citizens put a lighted candle or oil lamp in the window, providing more illumination on the streets outside, thereby contributing to a reduction in the crime rate.

But I have always favored a third. It not only nicely provides the image conveyed by the title, but also is an appropriate segue to our main interest here in Oil & Energy Investor – energy.

In 1820, Paris introduced a public gas lighting system created by the engineer Phillipe LeBon. He never lived to see his creation at work. LeBon had been assassinated sixteen years earlier on the coronation eve of Napoleon I (i.e. Napoleon Bonaparte). It had been for that occasion that his “thermolampe” had been invented. LeBon’s curious murder remains a favorite subject for French crime aficionados (punctuated by a bottle of wine or two).

Now, Paris was not the first to introduce a citywide system of street lamps. London had gained that distinction earlier in the century with a coal gas system following a decree from Parliament. But the unusually beautiful way LeBon’s invention lit up Paris streets (providing unusual city landscapes that quickly became labeled “streetscapes”) resulted in what commentators considered the greatest urban view of the age.

Today, there are some 300 landmarks within the city limits of Paris decked out each evening in panoramic lights, augmented by spokes of street lamps connecting them and all parts of the city. Anybody flying into Paris at night is presented with a striking image not easily forgotten.

When we arrive Wednesday morning local time, a fair amount of my next two weeks has been thrown into a series of rapid revisions – thanks to what I label “unanticipated consequences” coming from the latest White House moves.

As I have remarked previously in Oil & Energy Investor, my meeting in Paris is to be followed in short order by my flying to Frankfurt and meetings with Iranian ministerial and energy officials. Shortly thereafter, I was to accept an invitation to address the Iranian Oil Summit in Tehran.

Well, Trump threw that last trip for a loop by issuing an Executive Order preventing travel to the U.S. from seven Islamic countries, including Iran. Tehran responded in kind over the weekend by refusing to issue visas for U.S. citizens. This morning, Iraq did the same thing.

So much for my trip to Tehran.

But the problems extend well beyond my inconvenience…

Even More Serious Problems are Coming

And on that score, some of the changes in my Paris agenda are telegraphing more serious problems to come. These were not part of the White House plan but comprise genuine and disturbing fallout from a disjointed foreign policy still run by executive directives, 140-character tweets, and no outside involvement whatsoever.

As I write this, there are two serious unanticipated consequences revising my upcoming meetings.

First, a broader global Muslim backlash to the Trump immigration order is well underway. It threatens to marginalize the U.S. in a region where our interests are interconnected.

The backlash includes nations not directly under the ban, ostensibly American allies in the fight against terrorism (Saudi Arabia, Jordan, Kuwait, even the United Arab Emirates); it also involves an ally in which the U.S. has injected billions and lost thousands of lives…

Iraq is on the “list of seven,” a matter that has my contacts in Baghdad enraged. As one in the Iraqi Oil Ministry declared during a cryptic exchange on Sunday, “What was the point for the pain and sacrifice of the last 13 years, if Washington now views Iraq as an enemy?”

Several of my colleagues from Islamic countries have voiced an opposition to working further with American companies or U.S.-initiated and/or funded projects. That is going to make the Paris meetings that much more difficult.

Forget the media observations indicating our primary security concerns do not flow from the seven nations listed or that more problems have arisen from other Middle Eastern and Muslim countries with which Trump the businessman has active financial interests and are not on the list.

I do not care about the partisan points being made on either side. The immigration ban has been a move directed to fulfill a campaign pledge rather than advance genuine policy. But it’s having some potentially very dangerous collateral damage beyond U.S. borders…

America May Start Being Excluded from Energy Deals

As the only American at the meetings in Paris – all the heavy hitters I advise at these sessions come from someplace else – my approach is likely to be a “walking the tightrope” exercise. I have no interest in defending the Trump approach or piling on it in opposition.

The focus in Paris, and in the Frankfurt meetings with the Iranians coming up shortly thereafter, is to identify where the energy investment themes are going and how I can give you some early heads up on how to profit from it.

Which makes the second “unanticipated consequence” even more disturbing.

There is a move afoot to structure major global energy initiatives without American involvement.

Late Saturday evening, I received a change in emphasis for a seminal element in the Paris sessions. It requested that my advisory brief include a provisional estimate of the most effective ways to structure non-American networks for finance, operations, and risk adjustment on multi-billion-dollar (should we now say euro?) initiatives in traditional hydrocarbons (oil and natural gas), solar and biofuel energies, transport, and the related bank paper to facilitate them.

I’ve often said in Oil & Energy Investor that geopolitics impacts energy investments. Now it appears that I’m being thrust right into the center of it. This is going to be difficult.

Stay tuned for my next briefing, from Paris.

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  1. James Timmons
    January 30th, 2017 at 16:23 | #1

    Will you PLEASE share your observations with the Trump administration? They seem clueless concerning potential unintended consequences of their policies.

  2. Bob Schubring
    February 2nd, 2017 at 18:37 | #2

    What the US corporate media and the new Administration do a poor job of communicating, is why national borders simplify certain intelligence-collection tasks.

    The Israeli Lobby in Washington, has spent the last decade warning anyone who will listen, that the late Ayatollah Khomeini’s chants of “Marg bar Israel, Marg bar Amrika”, weren’t the mere venting of angry emotion, but were a statement of public policy.

    Israel’s most outspoken supporters in the US, insist that Tehran sought to wage war on Israel and the US and intended to commit genocide or something like it.

    These allegations are either true or false.

    They cannot be both true and false for reasons of political convenience.

    The Obama Administration hemorrhaged money into a new heavy Air Force bomber that could transport a conventionally-armed kinetic bunker-buster over Iran’s uranium enrichment plant and collapse the caves in which it is built. After this huge gift of corporate welfare to military contractors, his State Department haggled out an agreement with Iran, not to dig new, deeper caves in which to enrich uranium, that our non-nuclear bunker busters couldn’t destroy, and called it a victory.

    What makes that a stupid policy, is that nobody has bothered to check, now that Khomeini is long dead, whether there still exists an Iranian public policy of murdering Israelis and Americans with nuclear weapons.

    What actually matters to our national security, is motive.

    Is Iran trying to make an A-bomb and kill tens of thousands of people?

    If they are, we need to stop them from doing it.

    If they are not, we need to leave them alone to the use of their investment.

    China, after all, intends to open a new nuclear power plant every year for 50 years. Keeping those plants fueled requires uranium. It is entirely possible that Iran intends to make profits by supplying China with enriched uranium.

    It’s also entirely possible that Iran intends to build an atom bomb and kill a lot of people.

    What’s impossible, is for the Israeli allegation to be both true and false simultaneously.

    Before the US entangles itself further in both pursuing Iranian energy deals in case of peace, and waging economic warfare on the Iranian people in case their rulers want a new world war, it behooves us to get answers as to Iranian motives, and then make policy in accordance with what we find.

    We, the voters, are in command of the American republic. We elect a President to carry out our laws. We can refuse to renew his term of office, come the next election. It a President has warnings that any country wants to attack us, it is his duty to warn of that threat. Repeating the contradictory claims that Iran wants both peace and war, is dishonest and a dereliction ot duty.

    Let’s learn what the Tehran rulers intend, and respond accordingly.

  3. T.J.
    February 2nd, 2017 at 18:59 | #3

    Thankfully your vast experience with the American government, your advisory roles with them and with foreign governments puts you in a powerful position to advise your government’s real decision makers and the International community’s decision makers. Hopefully they together with the business leaders can take approximate action until sanity returns to the mainstream. Thank you for all you terrific analysis over the years, keep safe, relax and enjoy the time in Paris.

  4. Quincy G. Leslie
    February 5th, 2017 at 21:18 | #4

    Lifelong Republican, Trump supporter. Pres. Trump, cease further foreign affair initiatives, unless or until full input is received from Secs of Defense, State, Energy. Homeland Security and the NSA.

    You have won, you were duly elected. Now throttle back and make rational considered decisions. Let your exceptional Cabinet provide valunable input!

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