We appreciate the interest and engagement from our followers, but with Peter’s travel schedule and sheer volume of requests, we are unable to answer non-business-related questions via e-mail. If you’d like to join in on the conversation, head over to the community tab on our YouTube Channel
Our next video in the ‘Ask Peter’ series comes to you from just above Loveland Pass at about 13,000 ft. As the Biden administration piles on more drilling restrictions on public land, will America’s energy independence be jeopardized?
Quick backstory on America’s energy journey. The US was a net energy exporter until 1973. Once we used up all the “easy-access” oil, we became the world’s largest oil importer, peaking in the mid-2000s. Then the Shale Revolution changed everything.
Fracking gave the US access to a boatload of new oil (this technology has been around for a while but wasn’t popularized until the early 2000s). Fast forward to today, and the US is once again energy independent (minus a little COVID hiccup).
So will the Biden administration’s new restrictions on public land drilling set us back again? Oil from public lands accounts for such a marginal amount of the total US output that any of these regulations aren’t going to move the needle much. As long as there’s an incentive for these private landowners to be successful, this shouldn’t be a problem…
Offshore drilling is a little different. The quick and dirty is that short-term market moves aren’t the primary motivator in this space, so longer approval periods and stricter regulations aren’t of too much concern.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Yesterday we covered the key players in the US and Saudi relations. Today we’ll look at the strategic implications of this relationship over the past 40 years and what it looks like moving forward.
Saudi Arabia matters to the US more than many other US allies. Not only are the Saudis massive oil exporters, but they also have strong ties to the world’s Muslim population.
Over the past few decades, the US and the Saudis have partnered up to tackle a handful of critical situations; from stalling the Soviets to the war in Afghanistan to spurring economic growth in Europe and Japan, this relationship has proven vital.
The bottom line is with major players like Russia and China already in motion, the US and Saudis won’t allow ugly politics to get in the way of geopolitical relations. Saudi Arabia is a power center and doesn’t need to be under the American wing, but there’s still a mutually beneficial relationship on the table.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
We’re talking US – Saudi relations. This will be a two-parter, but today we’re focusing on the key players.
US National Security Advisor Jake Sullivan went to Saudi Arabia to lay down the framework for a new set of relations. As of late, relations have been less than ideal.
The National Security Advisor is really the manager of American foreign policy – even though the State Department gets all the credit. So seeing the hyper-competent Jake Sullivan leading the charge here is indicative of just how critical this is.
Biden’s push to Greentech has caused riffs in the relationship, but the other side has played a role too. MBS, the crown prince, is – for lack of a better term – an ass. And as anyone who’s dealt with someone like that knows, you have to put up with a lot of crap.
However, with Russia and China making moves against the US, Biden is starting to realize that Saudi Arabia is a very useful partner to have.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Most of the developing world has relatively similar demographics…the defining characteristic being a boatload of kids. And until recently, Mexico was no exception to that.
The first chart shows Mexico’s demographics before the new data was released. The only thing of note is the drop-off around age 25, where Mexico starts to move from a pyramid to a column shape. This is essentially a warning sign that if nothing changes, there will be a demographic collapse down the road.
The second chart shows Mexico’s demographics with the new data. Where did all the kids go? Well, a combination of the global financial crisis, COVID, and drug wars made people a tad less interested in raising kids. On top of that, America has shifted to a closed border system, which forced Mexican families to move to the US full-time instead of sending the men over for seasonal work.
This isn’t the nail in the coffin for Mexico, but they must change things up. And for the Americans, they best start treating their Mexican population like the precious resource it has become.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
The French have found themselves caught between a rock and a hard place, and a coup in Niger happens to be the catalyst for this predicament. To be clear, we’re only talking about Niger because of what it means for the French.
We all know the storied past of the British and French colonies, and a keen history buff would know France set up shop in the Sahel and West Africa. Well, this coup in Niger could mark the end for the French in this region.
There are a couple of options on the table. France could make the political decision to go in and kick out Wagner (who is a major foreign backer), which would be a roundabout way of attacking Russia. Or the French could pack up and march back to Europe, where they would also have to duke it out with the Russians, given the EU’s stance on the Ukraine War.
The French have long had their hands in many different pots, made easier by their geographic degree of separation from any rivals. However, it appears that the French will be making moves against Russia regardless of how they handle the situation in Niger…and that’s what makes this coup so important.
Prefer to read the transcript of the video?Click here
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Hey everybody. Peter Zeihan here coming to you from the front range foothills above Denver. And today we’re going to talk about the French and what they’re gonna be doing in the next several months. Specifically, the trigger is a coup that occurred in the African state of Niger, which is roughly at the intersection of no. And where people are trying to rack their brains about why Niger is important.
And let’s be very specific about this. Economically, it is not. Yes, it is a uranium source for the French, but uranium is not rare. Kazakhstan and Australia and Canada are three of the world’s fourth largest producers, and all three of those are increasing their output. So it’s not like this is going to cause a huge shock to the international system in any meaningful way.
The withdrawal of Russia from the uranium market would be far more substantial, and that hasn’t happened yet anyway. Why it matters is because it matters to the French. During the Imperial era, the British and the French were basically duking it out and competing for this or that colony wherever it happened to be. And the Brits were very, very smart about it.
They would look for places where there were natural markets or even better transport nodes, such as rivers that allowed them to take control of a local trade system without controlling all of the surrounding countryside. And that left all the countryside largely available for the French. And the French looked at it as a national ego issue and a size issue.
And so for them, the Sahel in West Africa was great because it was these huge expanses of territory. Well, you fast forward today and the Brits have the Commonwealth, which allows them to maintain some of those trade links. And the French are basically looking out for a number of countries that don’t like them very much, that are broadly economically worthless and difficult to defend throughout the Sahel and West Africa.
You have jihadist insurgencies because a lot of those areas near desert and it’s very difficult for the local countries to build capacity. And so they have to invite the French in to try to maintain a degree of security order. The problem with that strategy is when you have very low population density and very fragile systems, coups happen. And this is not the first coup in the region.
There’s already been one in Mali and Burkina Faso, which are two other former French outposts where the French troops have had to withdraw. Now, if Niger goes the same way, that’s pretty much the end of the French post-colonial jihadist era anti-insurgency operations throughout the region. It really is what’s left. It is the linchpin for what’s left. So the French now have to make a decision.
Well, let me give you the two options. Number one is they go in hard and kill or capture the losers. This is something that would be dramatic. Now, the French have the capacity. Nobody’s doubting that in terms of bullets for bullets, soldier for soldier, you’re talking about a force that is on par with American special forces. Probably don’t tell the special forces that.
And with a lot fewer political restrictions on their mode for action. So when they go in, they go in very hard. I have no doubt they could do that. The problem the problem is that the computers in Burkina Faso, in Mali and probably now in Niger are in part successful because of their links to Russia’s Wagner Group. Now, if you guys remember Wagner, that was the group that threw their little abortive coup a few weeks ago and were basically purged from the military system in Ukraine.
And the question is where they do now. Looks like a lot of them maintain operations within the African landmass because honestly, the routes are a little bit more flexible there. And if Wagner is in Africa, then they’re not in Moscow. There are are some operations in Moscow to take over Wagner directly to purge it of some of the senior leadership that might be more amenable to throwing a coup back home.
But part and parcel pieces of it will still remain active in Africa. The question is, what does everyone do about that? Wagner has been accused quite accurately of war crimes and crimes against humanity. And now that we know it’s the Russian state and has been all along. States are going to treat it differently. And this is an opportunity for France a very, very capable country, in an area that is near and dear to its heart to actually do something.
So we very well way see the French and the Russians going at it in Africa. And that would be a situation where the Russians would be eviscerated because Russian logistics are completely dependent on international trade and shipments. And France has an expeditionary navy in addition to some of the world’s best special forces. So that would be delightful to see.
But it’s a French political decision that would have to be made to pull the trigger. They can either have imperial retreat and the humiliation that they perceive that goes along with that, or they can take the fight to the Russians, which is a country that they attempted to not break relations with completely. Not an easy choice. Option two They suck it up and they go home.
One of the things that makes France. France is that it is far enough away from all of the global hotspots, whether it’s East Asia or Ukraine, that they have the flexibility to have fingers in a lot of pots. The quintessential statement is France has no enemies, no allies, only interests. And there’s a lot of truth to that. Well, if an entire region, Africa, sub-Saharan Africa, specifically, all of a sudden is a no go zone for the French, then they have a significantly lower number of interests in their neighborhood, and that will force them to focus on the ones that remain.
And if they can’t project power to West Africa, the idea that they can project power to a place like East Asia is kind of silly. So all of a sudden Europe becomes a lot more important to them, and Europe is involved in a war with the Russians. So one way or another, Paris is about to decide or be forced into circumstances where it’s going to be taking a lot more direct action against all things Russian, whether that’s in Ukraine or Africa, doesn’t really matter.
And that is something we have not seen the sort of lockstep agreement in the Western world is pretty rare, historically speaking, to have a cultural group form an alliance that’s already rare and it’s already been significant. But France has always been a bit of an outlier. And what we’re going to see over the rest of this year is that’s going to be a lot less true.
And that’s a real problem if you’re Russian because, you know, say what you will about the French. They are not shy and they are very capable and they’re about to throw in their lot. It’s going to be fun to watch. All right. Take care.
Today’s video comes to you from Pine Creek in the Collegiate Wildnerness of central Colorado.
Russia has pulled out of the grain deal brokered by Turkey and the UN, and the countdown on Ukrainian agriculture has officially started.
The Russians are wasting no time, as attacks have already begun on the physical infrastructure that allowed Ukrainian wheat, corn, and sunflower to reach international markets by ship. Unfortunately, none of this is new; Russia is looking for any way to crush the Ukrainian economy and kickstart a famine in the region.
Efforts to export these products via other channels are somewhat futile, considering the cost breakdown and the risk involved. With exports already down by 2/3 before this deal was abandoned, this winter wheat crop will likely be the last one of size to hit international markets.
And it doesn’t stop there. As Russia continues to target agricultural infrastructure, Ukraine will lose the capacity to provide for its own population and become a food importer within the year.
To that tune, I encourage you to donate to MedShare or a charity of your choice. We must support these organizations that are working aggressively to alleviate some of the human suffering caused by this war. Learn more below.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Apparently, the wind on the saddle between Mt James and Mt. Bancroft is pretty bad, so apologies for the audio today.
After today’s video, all the leprechauns out there might be mad because we’re talking about GOLD. And unfortunately, there’s no treasure at the end of the rainbow this time…
At the start of the Ukraine War, many of the world’s advanced central banks placed sanctions and embargos on Russian financial assets. As Putin tries to repatriate gold reserves from these hubs worldwide, what does this mean for the leprechauns who think we should switch to an asset-backed currency?
If you know your history, the answer is obvious. Every time we’ve used an asset-backed currency, it’s resulted in collapse. There’s just no asset, especially not gold, that can keep up with economic growth and expansion around the world. And when the currency becomes a brake on economic activity, you end up with a sharp crack in the system; which leads to depression and often state collapse.
You can argue that fiat currencies aren’t perfect, but don’t say an asset-backed currency would be better. This isn’t financial advice, but if gold continues to be pulled from these hubs, its use case will only get smaller and smaller.
Prefer to read the transcript of the video?Click here
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Hey everybody. Peter Zeihan here. Coming to you from the saddle between Mount James and Mount Bancroft. That’s Lake Oman just below me. I’m about 12,500 feet here. Today, we’re going to talk about other high minded issues such as golddd.
Now, one of the things that we saw last year with the beginning of the Ukraine war is that most of the world’s more advanced central banks started putting massive sanctions on. That included the embargo of Russian financial assets held abroad, whether it was foreign currency or gold reserves themselves. Now, the way the currency markets normally work is there are a number of nodes, places like Tokyo and London and New York, where trillions of dollars of currency are exchanged every single day. And by locating these things in these hubs, everything becomes a lot more efficient, especially when you’re talking about gold. It’s traditionally traded electronically, and the stuff is just kind of held in a big vault. There are pluses and minuses to that. The pluses, it means it can go anywhere at any time and interact with any one kind of like digital currency in general, or your ability to move money around via your bank account without actually going in and getting physical cash to hand someone. The downside, of course, is that, well, it’s in New York or London or Tokyo, and if New York or London or Tokyo decide that you’re a bad, bad person, then all of a sudden they can say, You know what? This isn’t moving anywhere. Not today, not ever. We’re just going to close the vault and your stuff is stuck. Because of that, a lot of central banks in the world, not among the countries that are doing the sanctions, but everybody else have been trying to physically repatriate their gold from those hubs back home. Now, there’s nothing to stop them from doing this. The question is whether or not there’s any utility in it, because if their gold is physically at home, the digital aspect of duty and transfer is much weaker unless you can find another hub. And at the moment, the only theoretical, and emphasis on the word theoretical, large scale place for that would maybe be the United Arab Emirates. The UAE just doesn’t have the experience right now or the credibility to be that sort of hub. And remember, any sort of secondary hub is not going to be using gold from the United States or Japan, Canada or Italy or anyone in the European Union, any of the First World. So you’re talking about something like 80% of global currency exchange, all of a sudden there’s not going to be using this new hub at all. Makes it very hard to get it going in the first place. Anyway, for other people, non-central banks, people who are using gold or other currencies as a matter of course, I wouldn’t get too excited about the idea of gold coming back as countries are looking for options that don’t use the hubs and don’t use the U.S. dollar and don’t use the euro or the yen or the pound. You’ve got to think about why we have a currency system the way we do. Now, back in the bad old days before 1970, we did use gold back asset backed currencies. And every time, every single time we ever had one, it ended in collapse. Because one of the things that you generate whenever you have trade, whenever you have economic activity, is you have to have some means of exchanging it that preferably is not barter. And usually, historically speaking, we have used asset backed currencies for that. But as growth picks up, as economic activity picks up, you need more and more and more and more and more of the currency until eventually you gobble up everything that is available. And when that happens, the currency itself starts to become a source of massive inflation, independent of the normal issues of supply and demand and logistics of labor and capital. When the currency itself becomes a brake on economic activity. You get a sharp crack in the system, usually a depression and oftentimes state collapse. This has happened with every single asset backed currency throughout human history. Now you can make the argument that the fiat age, where countries like the United States government just say, you know, this is what the dollar is worth and we’ll maintain it. And you can see that that is a flawed system that is fine, but it is by far better than all the other systems because the U.S. Federal Reserve, our monetary authority, has the ability to regulate the supply of the currency on a second by second basis. So if there’s strong economic growth, if from the 1990s until now, the U.S. economy expands by a factor of three, than there’s no problem for the Federal Reserve to triple the volume of the currency that is available for use. You can’t do that with gold. There’s another problem, of course, the daily currency daily global currency exchange is about four or 5 trillion U.S. equivalent. The U.S. economy is now $20 trillion. Global merchandise trade is over $25 trillion. All of the gold that the human race has mined in total, in the last 6000 years of history, it’s only about 10 trillion and only a few single digit of percentages of that is available for use in the day to day. Because most of the world’s gold is in things like wedding bands and museum exhibits and semiconductors. So not only theoretically is there not enough there, even if it was all pooled somehow, if we did go back to some sort of gold based system, you would have a crushing impact on economic growth because you would have hyperinflation triggered by the currency itself. And this is one of those things that most of those people who think that we should move on to something beyond the dollar tend to dismiss or think that we need to go back to a asset backed system, tend to miss. The human race in its current position with over 8 billion people at a combined global GDP pushing $100 trillion. Cannot function without fiat currency. Oh yeah, as I was climbing I thought of one more thing. And that’s Icebound Lake behind me. I know a lot of you are going to ask, or you’re going to translate it into financial advice anyway…I don’t give financial advice. Let me start by saying that. But number two, I’m not necessarily saying that you shouldn’t invest in gold. I mean, you do it for your own reasons. I would just point out that with many of the world’s secondary central banks physically repatriating their gold, it is being removed from currency exchanges, becoming a non-factor. No movement up, no movement down. They are basically repudiating the open exchange system that underpins most financially liquid markets. Now, does that mean that gold has no use? Of course not. In addition to its industrial uses and its jewelry uses, it can still be used as a method of exchange. But by removing gold from the digital system, it means you have to do so physically. So one of the ways that the Russians, for example, are getting around the sanctions regime is to physically load gold up into a plane and fly it to a country that they’re buying stuff from. That is neither bullish or bearish for gold because it never sees the light of day. It never gets exchanged in a traditional sense that can push the market up or down. So does that make the case for gold more or less viable? I’d say neither. It just makes it smaller.
Coming to you from Colorado’s very own Stonehenge out in the Lost Wilderness. Today’s new factoid is that youth unemployment in China is higher than in Italy (in percentage terms).
For context, Italy had the worst economic profile in Europe and has averaged negative economic growth for decades. If China’s unemployment resembles Italy’s, it is a very, very bad sign. Let’s break this down in the context of manufacturing.
Phase 1. Everyone is reshoring and pulling investments from China. Young people are pursuing IT jobs instead of manufacturing jobs. The problem is that China is a closed system that sucks at all things tech.
Phase 2. Xi’s cult of personality has ensured that China’s labor force won’t be able to develop into a value-add or tech-based system. Meaning everything will get significantly worse, and there’s not much hope of it getting better.
Phase 3. Remember the last time something like this happened in the Chinese system? We ended up with the Tiananmen Square protests. While that triggered the change in the political system we see today, Xi’s wiped away any opportunity for such change to happen now.
When a disconnect like this happens in the employment system, it inevitably translates over to the economic system. I’m not suggesting that this is the end, but this is how ends begin…
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Over the last few weeks, we’ve seen Iranian oil hit markets at nearly decade-high volumes…but production has remained relatively flat. So what’s really happening here?
Many of the sanctions being placed on Russia were originally used on Iran. And as we’ve seen Russia sell oil at a massive discount, Iran is following suit to come under the sanctions regime (rather than just smuggling it out). Basically, Iran is just selling oil LEGALLY now. Let’s compare Iran’s situation with Russia’s.
Russia is facing an existential threat, so nothing is off the table for them. Iran’s situation isn’t as dire, so they can have some patience. Russia produces most of the stuff needed to survive, so pissing countries off or stepping on toes isn’t a concern for Putin. Iran can’t sour their relationships because they still import a lot of stuff.
This gives Iran a chance to do something the Russians wouldn’t even consider…talking. Meaning there are opportunities for everyone still on the table.
Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
And then there’s you.
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.
Coming to you from the edge of Giants Playground in CO’s Lost Wilderness. Today we’re talking about Mexico’s energy sector.
As I was heading out on this trip, a fire broke out in Mexico’s Cantarell oil field, which has long been Mexico’s largest oil-producing asset. However, even before this fire, oil production from this field was already down to but 1/8 of peak production.
The Cantarell field was developed over a century ago and has accounted for most energy production in modern Mexican history. This meant Mexico never had to develop the infrastructure or workforce for a broad-based energy sector.
Even though Mexico has plenty of accessible oil fields, they can’t develop them due to a lack of skill and strict anti-investment laws. So energy production in Mexico is falling off, and there’s no reason to expect that to stop anytime soon. Within a few years, I expect Mexico to become a net energy importer (with most of that being refined product coming from the US).
But it’s not all bad…Mexican energy production might be slowing, but consumption is also rising. And thanks to NAFTA, Mexico is tied at the hip to the US. So even without a strong energy sector, Mexico’s future still looks bright. If government officials would stop lining their pockets and put that money where it should be, Mexico’s future could be even brighter.
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Hey everybody. Peter Zeihan here. Coming to you from the edge of the Giants playground in Colorado’s Lost Wilderness. Today, we’re talking about energy in Mexico. Specifically, just before I left on this trip, there was a fire at the Cantarell offshore oil field, which has long been Mexico’s single largest oil producing asset. At its peak, it was producing about 2 million barrels a day. It’s down to less than an eighth of that now. And that was before the fire. Probably talking about about 150 right now as – 150,000 barrels per day that is – as they go through recovery operations.
Now, the Cantarelll was originally developed over a century ago, and it’s unique as formations go in that it’s a giant, basically a volcano with all the pressure building to the top. And so all you have to do is put a few holes in the cap rocket attack offshore and the pressure does the rest. You can see every well that taps the controls to per field from all of the other wells. And it has been the mainstay of Mexican energy production for the entirety of modern Mexico’s history. That means that we’ve got a problem here. The Mexicans never had to develop what you consider a broad based energy sector, and so they never had to really develop the intellectual capacity and the labor force to do broad scale oil production in multiple zones. And so there’s a lot of oil production in Mexico that by global standards would be very easy to develop. But the Mexicans absolutely lack the techniques and the skills and the capital that is necessary to do it themselves. In addition, they have the world’s most draconian anti investment laws. Makes it almost impossible for anyone outside the United States to play. Now, as a country that borders the United States, those laws were set up with the idea of keeping the Americans out because they see that as a geopolitical weakness. I can see that point from them, their point of view. But it does mean that Mexico has seen their energy production drop bit by bit by bit for decades, and there’s really no hope to expect it to reverse anytime soon, even though they do have some super fields, some of which are onshore, they just can’t develop them themselves.
Now, there’s another problem because of the general incompetence of the Mexican state oil company Pemex. Mexico also is one of the world’s largest importers of refined product, even though they’re still technically a exporter of crude. And every drop of that comes from the United States. It’s gotten so bad in recent years that Mexico, at least on paper, is actually using more American refined fuels than they generate for themselves. The current government, under AMLO, that’s Lopez Obrador, is his last name, is building a refinery that honestly, they probably don’t know how to operate. And even if they did, it’s kind of hard to have confidence that it’s going to work because they already have refineries that are doing horribly. So we’ve got a bit of a boondoggle where the money should have been spent on things like, I don’t know, skills development that is estén instead going on white elephant projects that are designed to make Mexico City sound good to itself.
Where this takes us is Mexico is in basically a not so slow motion collapse as an energy producer of any type. And within the next few years, Mexico will certainly be a net energy importer no matter how you’re going to run the math. Now, that’s not as bad as it sounds. It’s not just the production that is falling. It’s also consumption that is rising. Remember that courtesy of NAFTA, NAFTA to Mexico or the United States are bolted together at the hip. And. Whereas, the United States is really good at the high end labor stuff for things like semiconductors and tech design, it’s also really good at the low end stuff would use a shale revolution and turns it into things like precursor materials, plastics. Mexico’s good at everything in the middle, and it’s value add is arguably the best in the world. So it’s not that the Mexicans don’t have skills. They just don’t have energy skills in the state monopoly sector. So it’s perfectly capable for Mexico to have a successful future, even as it becomes more and more vulnerable to anything the United States does in energy. Now, with a country that is literally leaking mechanics and is excellent in middle manufacturing, should we get a change in approach in Mexico City? The idea that Mexico can get back into the energy game is not, it’s not a ridiculous idea. But the current government is definitely more interested in lining its own pockets and making ideological statements than solving any of the endemic, misaligned skills and corruption issues that have plagued the Mexican energy sector for the bulk of the last century.
So at a minimum, we need a change at the top before we can get a change in the energy sector. I don’t see that happening this year. We can talk about it next year or the year after.
