Peter Zeihan, Author at Zeihan on Geopolitics

Romania, After America

Today’s discussion comes to you from Huron Peak. We’ll discuss one of the middle powers that’s been dealt a bad hand: Romania. At first glance, Romania’s geographic situation looks alright – a nice chunk of land near some water bracketed by the Carpathian Mountains – but zoom in, and you’ll find three very troubling access points.

These access points open up to areas that can support enormous powers, and Romania is just stuck in the middle. This means Romania is often first on the chopping block whenever those powers want to expand or branch out. So Romania is no stranger to being a cog in someone else’s empire.

Even if Romania could make peace with its extensive and mighty neighbors, a handful of smaller players are just as problematic…ahem, Hungary. So, the Romanians have been kept busy, to say the least.

Looking forward, Romania has some big decisions to make. They know Europe is in demographic decline, so there will be a power struggle for the region. They’ve seen Russia’s blunder in Ukraine, so there’s a chance they won’t have to roll over for Putin. So, a partnership with Turkey, one of the region’s emerging powers, could help carry Romania to the most significant chapter in its history.

That’s a bold statement, and yes, there are many caveats to it…but the potential to have a partner like Turkey that’s nearby (not directly adjacent) is a pretty good setup.

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 Collapse of Global Maritime Shipping

No matter how much bubble wrap and caution tape we slap onto global maritime shipping, the industry has found itself in quite a predicament.

Despite the Ukraine War, a drought impacting the Panama Canal, Houthi attacks in Yemen, widespread piracy, and mounting geopolitical tensions in the South China Sea (yes, that is a lot of disruptions), the maritime shipping system has not cracked yet. However, it is very, very, very fragile.

The main thing propping up shipping in these more problematic regions is the emergence of ‘ghost fleets’ with alternative insurance policies. This insurance system is untested and unreliable, and as soon as one of the dominos falls, the entirety of the shipping system will follow.

The looming threat of a shipping collapse should terrify you. In case you need a supply chain refresher, manufacturing and global shipping is more interconnected than ever…so if the global shipping system fails, we’re in for a world of hurt.

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 a chilly day in Delray Beach, Florida, while chilly for Florida. It’s like 50. Today we’re going to talk about what’s going on in the world of maritime shipping and why we should be thankful that nothing has gone horribly wrong yet and why we should count on that. Continuing. Just a quick recap of what’s gone down in just the last couple of months.

We’ve got Ukraine taking accurate potshots at Russian energy facilities on the Baltic Sea at a place called Ust-Luga and on the Black Sea, a place called to Tuapse. And they’re reviewing up for an overseas hit. Now we’ve got a drought in Panama, which, based on goose numbers you’re using and whether you’re going by value or tonnage, has reduced the throughput of the Panama Canal by somewhere between one third and two thirds.

We’ve got Houthis in Yemen who are taking potshots at pretty much every other vessel that happens to go by them, which has reduced shipping through the Red Sea by about 10% for energy and cargo. we’ve got fresh piracy in places like Somalia. This really gone away in places like the Gulf of Guinea or the Strait of Malacca.

And we’ve got the Chinese making ever louder noises about wanting to change the security environment in their own neighborhood, even as the Russians are actively making roughly two thirds of the Black Sea a no go zone. It’s a long list. It’s getting longer by the day. But, but, but, but, but, but to this point, there has not been a meaningful break in the old system.

A big part of that is because of the insurance structure where every vessel who’s sailing anywhere has to get some sort of policy to insure both their whole and their cargo. And while with the ever tightening sanctions on the Russians because of Ukraine or to this point, that system has not been broken. It has been denied Russian shipping.

But Indian, Chinese and Russian state companies have stepped in to offer policies. And so far, none of the ships that have had problems anywhere have been under one of those policies. So what has happened is we’ve got this dual system where we have the the normal world where the Americans and especially the Europeans are providing the insurance for most of the shipping.

When you’ve got this ghost fleet that’s developed, mostly older vessels that were about to be decommissioned, that have been brought back and given a new lease on life as second rate cargo haulers, especially for liquids where they have a Chinese Indian or Russian insurance policy. This ghost fleet, based on whose numbers you’re using, that may be as much as 10% of the global tanker fleet.

And there’s also a few brokers and maybe, maybe, maybe even a few container ships that are kind of joining its ranks now to anything that the Russians can do to keep things under the table from the point of view of global record keeping and shipping. Now, what that means is that the risk has been deferred and absorbed by this shadow organization that has kind of popped up.

We’re now in a situation where we’re kind of in a holding pattern where we’re kind of waiting for like a real actual disruption to happen. But so far, no real country has targeted any sort of shipping. It’s not like the Japanese and the Chinese have started trying to block each other. The U.S. is still using its naval power to patrol the oceans where it can, and the biggest beneficiary of that system is none other than China.

And we don’t have the Russians or NAITO deliberately targeting each other’s commercial shipping yet. In fact, everyone is very will be closely sticking to the old structures. They’re just kind of trying to maneuver their own ways to get national and regional advantages. Now, this isn’t going to be long for the world. This is a very unstable sort of equilibrium that we have reached in early 2024.

And the that this is crazy that goes fleet is the reason why it’s all still working. It’s kind of a testament to the strategic inertia of the system. But now the buffer, the ghost lead is something that is largely documented, largely under the table. And if one of these ships gets into trouble, it’s an open question of whether or not the U.S. Navy will step in to help.

All of these are unknowns, which means as soon as that happens, a ghost fleet ship gets into trouble or a real country starts taking shots at another country’s shipping. We don’t just lose that buffer. We lose all of the insulation that we’ve managed to build up in the last two years, and we get a very quick breakdown much faster than we would have otherwise.

Now, based on what happens geopolitically, this could all go any number of directions. If the United States decides to take a shot at what the Iranians are doing in the Gulf, you know, that obviously takes us one direction. The Chinese decide to do something in the South China Sea that takes us another. If Ukraine accidentally hits an actual third party vessel in some of its anti-Russian operations and goes another, if the Russians are bored and captured, somebody go into a Ukrainian forward that takes another.

We’re on the edge. There’s a lot of guns aimed at our heads right now. And it honestly from my normal point of view, it doesn’t really matter which way this goes. It all leads to the same in place where long range shipping is simply no longer viable and shipping in general through dangerous areas is simply no longer viable.

And the two biggest places in the world that benefit from the current system are, ironically, Russian sanctions busting oil exports, which have to sail all the way around Eurasia and Chinese merchant US exports, who have to do the same thing. Those are the longest haul plays out there, all going through dangerous zones. So when this cracks, we see those two things get hurt first, but they will be far from alone.

Remember, East Asia is home to half of all manufacturing supply chain steps. There is no version of manufacturing in the world, especially when it comes to things like computing and electronics, where it works without that setup. And that requires global shipping to be safe. So we need to be prepared for the not too distant future when all of this just stops working.

And we have to figure out a fundamentally new model that’s probably going to be more based on regional trade rather than global. Okay, that’s plenty for the day. Take care.

The Chinese Housing Crisis: Evergrande’s Bankruptcy

Evergrande, formerly China’s largest property developer, has just declared bankruptcy and the fallout is going to be massive. Let’s look at how we got to this point and some potential paths forward.

The collapse of Evergrande is a consequence of the Chinese government’s hyper-financialization policy that floods the economy with citizens’ savings to ensure stability…clearly it didn’t work. However, years of this policy have contributed to a massive overbuild of real estate, which is where many Chinese citizens have parked their private savings.

So, the potential for economic turmoil to ensue is quite high. How can China prevent this from happening? They can follow a Western-style bankruptcy procedure, which could stir up a whole slew of problems, or the government could intervene and circumvent the court ruling, which could spark concern internationally and diminish the legal autonomy of Hong Kong.

Regardless of which path is chosen, there will be dire economic consequences and myriad of issues for China’s social stability.

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 coming to you from Colorado. The big news over the weekend is that a Hong Kong court has ruled that China’s largest property development group, Evergrande, is bankrupt and needs to be broken up. This is something that the Chinese government has spent a lot of effort on the last two years. Not happening because. Well, let me give you a little back story.

So there’s two big things that dominate the Chinese economy. The first is something I call hyper financialization. The idea that the government both de facto confiscates the savings of the citizen population so it can only go into projects funded by Chinese state banks, as well as massively expanding the money supply to the tune of like almost triple what we have here in the United States in order to make sure that there is plenty of cash sloshing around in the system so that banks can loan anything in any amount at low terms to anyone at any time, because if they can do that, they can expand, expand, expand and hire, higher hire.

And people who have jobs don’t go on long walks in large groups together. It’s a public stability, political control approach to finance. It’s not about profit. It’s about throughput, because throughput requires a lot of bodies anyway. That’s the goal. In that sort of situation, you get two things. Number one, you get companies like Evergrande who gorge on all this bottomless supply of debt to build, build, build, build, build, even if there’s no demand.

Second, you get a population who knows that their private savings is almost worthless because the Chinese government is forcing them to keep it in the state banks and they want to put it into a hard asset that preferably the state can’t control. And if they can’t get their money out of the country, then the next best thing is a hard asset in the country, which typically is property.

So you get people pooling their private savings in order to buy condos, and each condo is typically owned by a different consortium of private individuals making untangling it. Also, you have somewhere probably in the vicinity of 1.5 billion units in the country that have never been lived and never will be lived in. So you’re talking about 100% overbuild conservatively.

Some estimates say it’s as high as 3 trillion, which is just so far beyond stupid. Anyway, Evergrande going down means that their debts aren’t going to be serviced anymore and the physical assets they have had to be parceled up. And foreign investors are going to come in and see what bits that they can get. None of these things are things that the Chinese Communist Party would normally allow to happen.

So there’s a couple of ways that this can go. None of them are good. Option number one is we follow a Western style bankruptcy and restitution program where this system is broken up and a lot of their assets are sold at pennies, maybe dimes on a dollar, and it just goes away. If that happens, we will have a very clear idea of just how much the oversupply in the market is.

And you can count on private citizens being up in arms probably. I mean, the best estimate I’ve seen out of China is that 70% of total private savings is wrapped up in real estate. And most of these assets are worth no more than $0.10 on the dollar. So if you have a fire sale of the single largest player, which controls one sixth of the market, holy shit, things are going to get real very, very, very quickly.

Option number two is that the Chinese step in and abrogate the Hong Kong ruling. Now, legally this cannot happen, but the Chinese Communist Party is not really big on legal details when it comes to Hong Kong in particular. And I have no doubt that they could stick their noses in that. If that happens, that Evergrande goes on some sort of state drip and everything with the system just kind of limps on with the understanding now that Hong Kong has no legal authority over its own holdings, which will start an exodus of what few international firms are still there, regardless how this goes.

Don’t expect anything in the market to get better. This is not like, say, the TARP program that the United States put into place back in 2008 at the bottom of the subprime crisis, which kind of froze the market and put a Florida things and allowed for reforms and economic growth to eventually heal the damage of the subprime crisis.

This is this is a one off decision that is not just holding back one rock from rolling down the hill. Evergrande may be the biggest player in this market, but it is by far not the only one has been doing stupid things like this building condos that have no demand or running that like a Ponzi scheme. Every development company in the country basically operates this way, and the second and third largest players in the industry are state owned.

So you can count on the Chinese government not using this as an opportunity to break with the old model and put into place something sustainable. And even if all of a sudden this place were run by a bunch of Austrian economists, it’s too late. Housing demand, legitimate housing demand, housing demand for houses that people actually live in is dominated by people age 20 to 45.

People who are starting out well. 45 years ago, the Chinese government instituted the one child policy. You combine that with the most rapid urbanization program in human history and there are no longer enough people under age 45 to do anything that is consumption led, including home buying. So there is no path out of this that follows any pattern that we have established in a market environment which leads us to political and social outcomes, where the market economics are just atrocious and getting worse by the day with a government that is becoming ever more nervous about the state of the economy and the loyalty of its population.

I don’t want to say anything overly dramatic is like this is where it all starts to fall apart because we’ve had a lot of things like that go down in the last 18 months. But this cuts to the core of what enables the average citizen to actually support the government. And there’s no way we move forward from this without a lot of side damage.

The US and Iran: Deciding What to Bomb

Three US soldiers were killed in a drone attack carried out by an Iranian militia near the Jordan-Syria border. I expect a timely retaliation by the US, but what will that look like?

The Biden administration could choose to target Iranian-backed militias, Iranian military assets, or even Iran’s economy directly. Some of these are a bit more involved, but disrupting oil exports wouldn’t take much more than a fly-by of Iran’s primary export terminal on Kharg Island.

There will likely be global repercussions regardless of which option the US chooses; however, given the United States limited reliance on Middle Eastern energy, disrupting that system could prove beneficial for North American interests.

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 Colorado. It is the 29th of January and the news today is that in a rocket attack, a Iranian militia operating near the border of Jordan in Syria managed to get a missile into an American base and kill three people in the vicinity of one of the barracks. These are the first deaths of American military personnel since the Iranians started pushing groups like the Houthis to attack Americans and international commerce in a large volume.

And it’s probably going to merit a response. Something to keep in mind is when the United States couple of weeks ago decided to start taking military action against the Houthis in Yemen. It wasn’t because these Iranian backed groups were attacking commerce in general. It’s because they fired an anti-ship missile at a U.S. military vessel, and that’s what started it all off.

So working from that same logic, now that some Americans have actually died, you can expect the Biden administration to strike back. The question is how? There’s kind of three things to consider. None of the options are great. Option number one, you do a semi proportionate because the Americans always believe in overkill assault against the militias that Iran backs either in the area in question or somewhere in the broader Middle East.

The problem with this is it doesn’t solve the problem. The people who are doing the attacks aren’t Iranian. They’re just using Iranian equipment and sometimes a little bit of Iranian intel. And even if you were to wipe them all out, they come from sectarian groups who are opposed to their local geopolitical orders. And so they tend to oppose Sunni groups who tend to be in the majority, especially in places like Jordan or in the case of Iraq, where you have a pseudo democracy.

And in these cases, even if you take them all out, you just have an aggrieved minority that would, again, push people in that the Iranians would recruit. So it might make things calm down for a few weeks to months, but it’s certainly not any sort of lasting solution that’s going to change the logic in Tehran at all. The second option is to strike military assets in Iran proper.

The idea is you go after the personnel that are making these decisions. The problem here is that there’s a lot of them. Iran isn’t like most strongman autocracies. You’ve got a ruling elite of the religious, the class, the mullahs, who’s over 10,000 people. And even if you were to somehow magically carry out an assassination program and within 24 hours, kill the top thousand of them, I mean, sure, they’d have some reshuffling, but it actually wouldn’t disrupt the regime in any meaningful way.

In addition, Iran is a series of mountains. It’s basically a fortress. And if you wanted to go in there and knock the government out, you would need a force significantly larger than what the United States pushed into Iraq, which is ultimately a flat and somewhat desert community. And that means you’re going over a mountain range in mountain range and mountain range.

So the distances are far. The logistics would be hard. The geography plays to the defenders strength. And then even if you were successful, well, then what are you going to stick around and try to reconstruct Iran in the way that we did Iraq? I think I think the U.S. learned that that’s not an easy thing to do. So and again, this wouldn’t change any of the logic in Iran about what they’re doing in the broader reading, if anything, were to intensify it.

That leaves us with the third option, which is a military option against Iran’s economy. Now, Iran, while it is nowhere near the peak that it once was back in the seventies, is an oil producer. What it was exporting, more than 4 million barrels a day is still in the game and still exports about a million barrels a day.

And that income is the primary source of hard currency that the Iranians use to fund everything that they do from purchasing social stability, from their population at home to funding these rocket attacks against U.S. military targets throughout the broader region. And unfortunately for the Iranians, it all flows through a single point called Kharg Island, which is on the northeast shore of the Persian Gulf.

And it would be very, very, very easy for the United States just to destroy the loading facilities or maybe even the storage tanks and the pumping stations in Kharg. They could probably do it with a handful of sorties, would probably take less than an hour. Iranian missile defense is is not very good. Their air defense is not very good either in the U.S. obviously is very good at striking in those sorts of conditions, especially when you’re talking about something that is on the coast.

So you don’t have to fly over too many defensive layers to get to it. It’d be a cost to this, of course, should the United States decide to do this step. It would take the role of the erstwhile global guarantor of maritime security and have the United States taking very discrete shots at very specific parts of the global economy that have relied upon international security in order to function.

And that means that any vessels that are part of a long supply chain along sail going through a dangerous area, near a dangerous area, or have multiple supply chain stops, meaning that if you interrupt just one of them, all of them become defunct. All of that would be in danger. And that is the entire electronics supply chain in Southeast Asia and East Asia.

That is the entire oil supply chain which either is sourced from or passes through the Middle East. The consequences of that would be significant on a global basis. But if you want to take the American populist view, which is something that Biden and Trump agree on, is that a lot of that doesn’t really matter. And in fact, there’s something to be said for stalling those international systems because they favor North American solutions.

The United States doesn’t get energy from this region anymore. Canada doesn’t, Mexico doesn’t. So the economies that we care about the most are heavily insulated already. And the economy that we’re most dependent upon or the most concerned about is China. And they get all of their energy from Pittsburgh reach that well, not all, but like half. And so if the Biden administration does take this step, two things will very much be in motion very quickly.

US Congress Dysfunction: Blocking Aid to Ukraine

We are taking a question from the ‘Ask Peter’ forum today – am I worried about Ukraine’s dwindling weapon’s supplies in light of what’s going on with the US Congress? Yes, yes I am.

Ukraine’s supplies are running out and there’s a dozen or so Republican’s blocking anything from being passed in Congress, so that means no more ammo for Ukraine. However, this isn’t isolated to things involving Ukraine, these Republicans are blocking everything they disagree with. So, this is a problem for everything and everyone.

Sure, we’ve seen unproductive Congresses before, but in case you haven’t flipped on the news in a while – there’s plenty going on. The real kicker is that I don’t see this resolving itself anytime soon. I’m sure people will try to step across the aisle and work something out, but the extremes from both sides will be sure to stomp that out ASAP.

Unless we see some true bipartisan cooperation, the dysfunction we’re seeing in Congress will only get worse. Hopefully, we don’t have to wait for the November elections to sort this out, but I wouldn’t be surprised.

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 everyone. Peter Zeihan here. Coming to you from Calais at the southern point of the island of Hawaii. Got the slopes up on a lower behind me, the larger volcano here. I am going to take something from our Ask Peter Forum. We’re going to put that link here at the end of the video too, in case you are sending your own questions.

And it’s am I worried about Ukraine in the light of what has become an American boycott on weapons supplies? Yes. Yes, I am. The Ukrainians are running out of ammo. There’s no way they could produce enough to support the war themselves. And the Russians are mustered. A fresh human wave. And, you know, human waves are very vulnerable to mass fire, but you have to have ammo for that to work.

So there are some concerns. We might be seeing a turning point in the war here in the next few weeks if something doesn’t change. But what is going on is we’ve got a dozen roughly Republicans on the right who are blocking anything from happening in Congress that they don’t agree with. And so this is not a Ukraine problem.

This is an everything problem. These few reps are blocking anything on any issue. So we’ve got programs that need to be addressed, not just Ukraine, but aid for Taiwan against China, aid for Israel, against Hamas, others issues with health care and business reform and criminal justice before the Senate, the defense system and the budget, every single thing has been dropped.

It’s not that these folks oppose Ukraine per se. It’s they oppose anything that isn’t exactly their way. So I call them the Greenpeace faction of the Republican Party because they just hate everyone. This means that this Congress has been the least productive in American history at this stage. And Congress a little bit more than halfway through their session.

We’ve only passed about 20% of the bills that the second the least productive Congress in history has passed. So this is an issue of big government versus small government. This is just an issue of dysfunction and it’s a problem for everybody. Now, I don’t think it’s going to get any better any soon. When the Republic ends didn’t do very well.

And last midterms, the hope of getting a big majority vanishes. They had a very slim minority beginning, and they have seen that minority shrink down in part, it’s because they’ve cannibalize their own. This faction of Republicans forced out the former Speaker McCarthy from California. And so he just quit. He left the House altogether, leaving that seat open. We’ve had another couple of resignations since.

And then the Republicans purged one of their own, a Republican, Santos of New York four. Let me make sure I get this right. Using campaign finance to purchase gay fetish foot Port Arthur can’t make a shit on any hill. What it means is not just that the margin that the Republicans have in the majority has gotten smaller and smaller.

Worse than it sounds. Because to pass something in Congress, you don’t need a majority of the votes. You need a majority of the seats. And so every empty seat kind of acts as a quasi vote against the majority. So they only have a Republican that only have a margin of two. They can only lose one vote if they still want to get things passed.

That makes each individual faction, including the Greenpeace faction, more powerful. So this is going to go one of two ways. Number one, they’re going to continue to stall everything. And this Congress will go down in history as the most pathetic ever until we have general elections a year from now, November and the new Congress would set in January, or the bulk of the Republicans reach across the aisle and start cutting deals with centrist Democrats.

Now, that’s not as easy as it sounds. There’s a lot of minutia, there’s a lot of politics, there’s a lot of noise. And in the environment that we’re in right now, anyone who reaches across the aisle is inviting a primary challenge from the freak wings of their parties, whether it’s the Greenpeace faction of the Republicans or the squad version of the Democrats.

So none of these are easy decisions, but they do suggest that drama in Congress is going to increase or rather than decrease in the months ahead. And that’s not just bad for Ukraine, that’s bad for everyone except for the Chinese who think this is fair test. All right. That’s it for me. Take care.

Finnish Presidential Elections and Anti-Russian Sentiment

Finnish politics are not something that often make the headlines, but with a marked shift away from “Finlandization” (when a smaller country remains neutral to appease a larger and more powerful neighboring country) comes some unfamiliar coverage.

Finland has become one of the largest and most assertive supporters of Ukraine, both materially and diplomatically. The most recent presidential elections reflect these anti-Russian sentiments, with candidates competing to take the strongest stance on large ticket items like security issues and more nuanced issues like revoking Finnish citizenship for Russian-Finnish citizens.

This election is just a glimpse at the complexities of Russian relations within Eastern European countries and a signal of what might be coming…

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 slopes of Mount Lower with Mauna Kea there in the background, surrounded by volcanic, you was going to go all the way up to the top, but apparently the volcano decided to destroy the road. So whatever. Anyway, that means you get a bonus video. The big news, it’s happening today. We were seeing this on Sunday, the 28th, is that there are presidential elections in Finland and for the first time ever, they matter.

So since the Ukraine war, we haven’t had a lot of electoral contests in Europe in the context of the change security environment. This is really the first one that matters. It matters for more than one reason. Finland. Well, there’s a term for it familiarization. The idea that you’re scared of your bigger neighbor. So you plot a neutral policy in order to make sure that they’re not aggravated.

And this is the position that Stalin forced upon the Finns back at the end of World War Two. And so presidential elections have always been about that debate of just how friendly can we be to the Russians so that they don’t decide to invade us. And that has been the case now for over a half century. And the outgoing president was known as the the Putin whisperer because she had a tight personal relationship.

But with the Ukraine war that has changed. And Finland is arguably of the of the real countries, the sizable countries that are assisting the Ukrainians, the one who has provided the most material support per person as well as leading the charge in terms of diplomatic efforts, and has also jumped on board NAITO, which is something that they assiduously avoided for the last 70 years in order to not aggravate the Russians.

Now, the presidential contest is a beauty contest about who can be the most anti-Russian, who will take the strongest position on any type of security issue. And so we’re kind of seeing the debate take place in three general arenas. The first is the Ukraine, where proper who’s going to promise more aid, who’s going to be more of a hawk?

The second one has to do with citizenship. There are a substantial number of dual citizens who are Russian and Finnish citizenship. And the debate at the presidential level now is whether or not to revoke their Finnish citizenship if they do not surrender their Russian citizenship. And that’s important enough as it is, but it also is carrying out into European foreign policy because Finland is not the country in Europe that has the largest percentage of ethnic Russians among its population.

That would be Latvia, with Estonia and Lithuania coming up in second and third place. So there’s always been a little bit of a quiet human rights debate within Europe about the position of the ethnic Russians in those countries. With Finland trying to take the position of the ethnic Russians in order to mollify Moscow. Well, that is not the case anymore.

The debate is whether or not these people should be kicked out, whether they should be forced to change languages, whether they should lose their European Union citizenship. The fact that the Finns have changed so much in two years is just a testament to just how brutal war in Ukraine is and how close it hits to home to countries in these regions.

Something to consider if you don’t live in Eastern Europe for anyone else in the world, the countries from Finland to Estonia to Latvia to Poland, to Romania and Bulgaria. Now these are the countries who have the most experience of living under Russian rule or fighting the Russians, and they’re the ones who have been basically training their military in order to support the Ukrainians in the conflict because they know what happens if they don’t.

Anyway, by the time you view this, the polls will have opened in Finland and we should have results in the not too distant future as Europe’s most neutral country becomes its most aggressive. A One more thing for those of you who are not fueled by issues of democracy versus repression and mass rapes and or how about illegal migrants?

Yeah, so the Russians have been flying people in from South Asia and the Middle East and herding them through the force of northern Russia and forcing them through the Finnish border. So that really has the Finns all cheesed off to.

Ukraine Attacks Russian Energy Terminal

Ukraine managed to sneak some drones by Russian air defenses and hit the Ust-Luga oil refinery and loading facility. The attack didn’t cause significant damage, but it disrupted production and shipping operations.

The successful attack has given us a glimpse at Ukraine’s capabilities and what might be in store for the future. The Russian’s response to the drone strike pokes glaring holes in the Russian system, specifically the lack of qualified workers and immense strain placed on the limited skilled personnel actively working.

This attack is a reminder of how the Russian oil industry can impact global oil supplies and the massive vulnerabilities within the system. Sanctions have also intensified in a weird sort of way following the attack, which has further impacted the flow of oil to Europe.

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.

Everybody. Peter Zine here coming to you from above the very active Kilauea volcano. That’s the crater that kicked off last year. Today we’re going to talk about an assault that happened last week. The Ukrainian sent a squad of drones north out of Ukraine over Russian airspace into the gulf of finland to attack the Ust-Luga…hope i pronounce that right.

Oil refinery and loading facility now north mali, this wouldn’t really matter because normally drones, as we’ve seen, can’t get through any sort of meaningful air defense. But the Russian air defense in this area appears to be just as crappy as it is everywhere else in the country. So a bunch of them got through. The other reason I would normally care about this is most refineries.

Everyone gets all you want on. They expect Hollywood explosions when a bomb goes off in a refinery, you know? Yeah. Keep in mind scale here, most refineries are over a square mile and this one’s no exception. There’s a lot of standoff distance among the different facilities. So if something does blow, it doesn’t blow up the whole thing. And crude oil at room temperature isn’t even flammable.

So the warheads that these bombs can carry, which are less than £100, probably with the models that were used probably under £20, it’s not that you can’t do damage, but you can’t do real damage. But this is not just a refinery. This is also a loading facility. And in a refinery, once you’ve made your fuels, fuel’s being more flammable than raw crude.

You then put them into a truck or a pipe and send it away With a port facility you put into a big giant tank and then a large vessel comes by and sucks off what it needs and goes on its merry way. And so the tanks themselves are the vulnerable points here. Now, judging from the size of the explosions and the fires that were started, the tanks were not hit.

That’s just something that you should have in the back of your mind when you evaluating. When somebody says a refinery, a certain piece of energy infrastructure was hit, you know what to look for. What’s interesting here are two things. Number one, it took the Russians more than three days to put out the fire and they put it out the wrong way, using water in, you know, the near Arctic winter, which caused a lot of water to freeze and then expand and break more infrastructure damage assessments are still underway.

We don’t know how bad it was. And it had this been a normal attack, we would have known within 24 hours whether or not anything substantial had been done. But here we are nearly a week out and we still really don’t have any more but the vaguest ideas and the facility is shut down. Now, there’s a lot of reasons why this matters.

Number one, while the Europeans have put sanctions on seaborne crude, seaborne oil product is in a loophole. So they were still taking stuff from this facility. And with its shut down, all of a sudden sanctions have gone up to a whole new level. And we’re going to have a very good idea of how the Europeans can absorb or not.

This newest change. Quick add on the Ukrainian attack on US. Luger was on Sunday, the 21st in less than 72 hours later. The Russians were able to begin shipping out again. However, what is being shipped out is primarily oil, almost exclusively oil and something called condensate, which is kind of a raw product somewhere between natural gas and oil.

The actual refining complex remains completely offline. There’s no naphtha, there’s no fuel, there’s no intermediate products that are coming out at all. And at present, the Russians are still completing their damage assessments. And at the pace they’re going, we probably won’t have any information on the level of damage until probably March. And then with their very, very thin remaining skin of skilled labor, they can start talking about repairs.

Second, this is the first significant Ukrainian attack against a significant economic asset of the Russian Federation. And at least on the surface, it looks like it was much more successful than they ever thought was possible. That means that the northern parts of the Baltic Sea and the Gulf of Finland are suddenly in a danger zone that is well within the Ukrainians proven range of operation.

Now, the Ukrainians and the Russians haven’t really gone against civilian shipping right now, but I can’t think of a better target than an oil loading and refining platform such as what we’ve got. And it was ooyala. Again, apologies for the inaction. We’re just going to put the spelling right here so you can see what I’m having the trouble with.

Okay, So this is the sort of thing we should now watch for in the future, because this is not the only facility of this type which is within the Ukrainians reach. There are a number of facilities that no virus sees on the Black Sea and two ops on the Black Sea and closer to St Petersburg, also on the Gulf of Finland.

And now that the Ukrainians are proving that a few things can slip through, you can bet that they’re going to target all of them and all told, if you look at all of the infrastructure combined, it’s combined export and throughput capacity is in the vicinity of three and a half million barrels a day, which is about three and a half percent of global output.

So if you put a meaningful dent in the export infrastructure, it’s impossible for the Russians to shunt this stuff somewhere else. There’s nowhere else to go. And so it just backs up through the system. There’s also one other thing to look at the fact that the damage control crews proved to be so incompetent is something that we’re starting to see at the edges as the Russian economic system frays.

The Soviet educational system collapsed back in 1986, which means that the youngest people who are worthy of terms like engineer, turned 64 this year. And so when I think of fire suppression, I think of something that normally I could not just pick up the hose and go do it. You want someone with specialized training, and especially if you’re talking about petroleum, natural gas or refined product fires, you definitely want someone has some idea what they’re doing.

Russia is running out of those people. It’s not just that a million people have fled the country and a half a million have been drafted and committed to the war being killed. They don’t have much of a skilled labor pool left. And what they do have is being dedicated to the war itself. Air defense in the vicinity of the war, or the military industrial complex to keep the war going.

So we’re seeing some very serious phrase with the system. This this is not the sort of thing that they should have gotten wrong. That fire should have been put out very quickly with things like foam, and it wasn’t. And that suggests the Russians ability to maintain their overall system is starting to feel the strain of all of this.

And they don’t have a backup plan. There isn’t enough labor in the country to redirect from somewhere else, especially skilled labor. All right. That’s it for me. Take care.

India’s Counter-Piracy Operation: A Geopolitical Wormhole

Today we’re talking about the Indians and pirates – sorry sports fans, not those ones. India launched a successful counter-piracy operation off the coast of Somalia, which has helped reaffirm its global strategic importance, but raised some eyebrows in the process.

India has a unique geopolitical position: they have an ultra-nationalist view on trade and an extreme reluctance to integrate with other nations. If you look back to the Cold War era, partnerships with Russia have left a bitter taste in the Indian’s mouths.

So, India will be pursuing its own economic path, independent of outside forces. As they look to double the size of their industrial plant, what they lack in quality, they’ll make up for in a market of 1.5 billion people.

The eyebrow raising portion of all this is that it means India could launch its own piracy operations. Meaning India will likely be the de facto controller of trade in the Indian Ocean Basin – a critical route for oil transport.

Other countries will have to find ways to work around this new obstacle, and financial incentives are probably going to be the best option. The US is far enough removed to take a hands-off approach and let the Indian’s determine the future geopolitical landscape of this region.

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 winter wonderland that is Colorado after a snow storm. It is the 8th of January. And the news today is that the Indian navy has successfully engaged in a counter pirate operation and freed a vessel with a majority Indian crew from pirates off the coast of Somalia. This is nearly at the outer reach of what the Indians can reach, which the rebel forces and counter-piracy operations are always lots of no fun for everyone.

And so this is a pretty important tactical victory. And I think it underlines the role that I see India playing in the region in the future. Now, India is not like any other country in the world. It’s certainly not like the United States. They have a very nationalist view of trade and they don’t like to integrate with anyone.

And they are an ideology vehicle, opposition to globalization because it was American led and during the Cold War, the Indians tended to be more pro-Soviet to the point that even when the Soviet Union wasn’t around anymore, the Indians tended to be fairly pro-Soviet. But we’ve seen this weakening in that position over the course of the Ukraine were not because they’re having a change of heart, but because they’re realizing that all of the billions of dollars that they spent on developing joint weapons systems with the Russians was basically stolen.

And they’re never going to get any of it. So the Indians, from a national security point of view, are increasingly going their own way. That may include some deals here and there with the United States, but those will be tactical, not strategic. And it’s going to be a very l’écart experience, as opposed to, say, the American relationship with Japan or with Australia or even with Saudi Arabia.

India is going to do its own things for its own ways. Also, India doesn’t really like anyone and there aren’t a lot of countries out there that like India, so they won’t be partnering with anyone else in economic matters for manufacturing. They’re going have to do more or less the same thing that the U.S. is going to have to do as the Chinese system breaks down.

And that means doubling the size of their industrial plant. But they’re not going to have a joint manufacturing system with Bangladesh or with Pakistan or Sri Lanka or with Iran or with Myanmar. And those are all the countries that the border. So India’s industrial plant is going to expand massively, but it’s all going to be in India. That will affect quality issues, of course.

But, you know, India is a market with 1.5 billion people. I think they’re going to deal with that just fine. What that does mean, however, is their threshold for military action is going to be very, very low compared to a lot of other countries because they’re not integrated with anyone. They’re also the first major stop for oil going out of the Persian Gulf to East Asia, which is where it almost all goes.

And now the Indians have conclusively demonstrated that they’re capable of doing anti pirate operations. Well, not to put too fine a point on it, but if you’re good at anti pirate operations, you’re also, by default, very good at pirate operations. So now that the Indians are not beholden anyone, and now that we are seeing a breakdown in the Chinese system, we’re going to see the Indians taking that de facto control, the de facto management of any trade that happens to come through the Indian Ocean Basin, and that includes the world’s largest oil transport route.

So the issue for everyone else in the area is whether or not you can find a way of dealing with the Indians. And to be perfectly blunt, the best way to do that is cold, hard cash, because the Indians are otherwise more or less going to be self-sufficient in the world that we’re going to, and no one can reach them.

They’re literally a continent away from all the other potential players. And as for the United States, if we have an India that is a little bit that’s the best word, persnickety in its own region, that’s fine, because there aren’t a lot of U.S. interests that pass through that region in a post China scenario. So this is just where we’re headed.

And the Indians very clearly are a step ahead of everyone else.

US Natural Gas and Global Energy Supplies

Today, we’re looking at the US natural gas market based on energy data from 2023. The US natural gas market was remarkably stable in 2023, so being the world’s largest producer and exporter of natural gas has its perks.

Thanks to shale and fracking tech, the US maintained an average natural gas price of just over $2.50 per thousand cubic feet (and the low was about $2.20). As soon as we zoom out, we see much more volatility in the global natural gas markets…

Most of the world faced higher prices due to disruptions in Russian supplies and increase in demand across the board. As the Russian natural gas system continues to degrade, the world will struggle to find a suitable replacement. Liquified natural gas (LNG) is a top contender, but it’s expensive and quite technically challenging. A Russia-China pipeline has also been tossed around, but I just don’t see them overcoming the logistical and financial hurdles.

As the rest of the world scrambles to figure out their energy solutions, the US will be well equipped to ride out the wave and even emerge as a key player in the global energy landscape.

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 everyone. Peter Zeihan here coming to you from flat on my back in bed because I threw out my back. This is the last what I heard from here. We have a dead update from the U.S. government, specifically the Department of Energy’s Energy Information Agency, which tracks energy production, usage and prices and everything and their data for a calendar year 2023 indicates that the average price for natural gas in the country was just over $2.50 per thousand cubic feet.

In fact, it bottomed out at just below $2.20 in May. And this is after a really volatile year in calendar year 2022, when because of the Ukraine oil cuts a slow, we’re because we’ll just we’ll just do that we’re because of Ukraine or there was high demand everywhere and everyone was trying to get away from Russian natural gas in that calendar year.

U.S. prices hit nearly $10, but that was nothing compared to what happened in the rest of the world. With prices for several months being above 50 and even approaching a hundred in a few areas, which still boggles my mind that we actually hit those numbers that way. 2023 was much calmer. And the reason for it is twofold. Number one, that the United States is not just a producer, an exporter of natural gas, but it does so using a series of technologies that are broadly not applicable in the rest of the world.

The shale technology and fracking. Because of this, the United States has a break even price in our pure shale natural gas fields, typically below five in some places below $3 per thousand cubic feet. And second, we get a lot of associated natural gas production that comes from our shale oil operations, which, you know, technically based on how you run the numbers, that could be free anyway.

It means the United States is the world’s largest producer of natural gas, kicking out about 120 billion cubic meters a year. And most of that is trapped in the system at home because moving natural gas from A to B is kind of difficult. There’s really only two routes. One is to have a pipeline network that sends it from production to consumption locations.

Usually those are within individual country because natural gas being a gas is hard to store. And the U.S. does have the world’s largest system for distribution by far. The second option is to chill it down to -300 odd degrees into a liquid form and then put it in onto a special sea tanker to send it across the ocean to someone who has a specific receiving facility, who can take the liquid and reclassify it without it blowing up.

All of that is as expensive as it sounds. So what happened in 2022 in Europe was the Europeans used to be on a pipe system that brought in stuff from northwestern Siberia for the most part, and that gave them access to reliably, large and reliably cheap supplies. So when the Europeans decided to move on from the Russians, they had to go to some other piped suppliers that they have, specifically Algeria, Libya, and especially Norway.

But that wasn’t enough. So they had to go out and tap the world for liquefied natural gas, which is not available in large volumes in the way that piped gas from a neighbor can be. And so prices went up and up and up and up. And in the United States, we sent everything that we could and that allowed the Europeans a degree of energy security, but only at a very, very high price point.

What we’re seeing now is the slow motion so far, slow motion degradation of the Russian system, because the pipes are all oriented towards Europe and they are falling into disrepair because they’re not being used. And the Russians are using all their technical experts to maintain their war effort. They do have a couple of liquefied natural gas facilities, some in the Far East and the island of Sakhalin, north of Japan, and some on the IMO Peninsula in far northwest Russia.

But it is foreigners who provide the technical skills for those facilities to operate. And as those technical skills are increasingly withheld, these facilities will fall into disrepair. And well, let’s just see when you’ve got a refrigeration unit that is dealing with billions of cubic meters of flammable materials and something goes wrong, something goes wrong all at once. We haven’t had any industrial accidents at these facilities yet, but it’s only a matter of time, one year to year, five years.

I don’t know how long before those facilities go offline and then Russian natural gas will be gone. Getting it out by other means is nearly impossible. There are very few countries that can do LNG liquefaction. China is not on that list. Most of them are part of the Western alliance plus Japan that is backing Ukraine. And if you’re going to get a pipeline for the small peninsula to populated China, you’re talking about the world’s largest chunk of infrastructure with roughly 70% of the train it’s going to cross being virgin with no existing infrastructure at all.

So you’re talking tundra and tiger and permafrost and mountains. Building that pipeline would be $100 billion project. It would take a minimum of 15 years. And even if it was done, the cost of operating would be two, three, four times as much as the natural gas would be worth. So the Russians and the Chinese repeatedly say that this pipeline is going to happen.

They’ve been saying that for 20 years. And then you get down into the details and the traders again, the Russians are going to pay for the operation pipeline. And the Russians, like, you know, the Chinese are going to pay for the operation of the pipeline. And that’s why nothing has started. So the world has to get by without Russian natural gas.

And until a year and a half ago, they were the world’s largest exporter. That is going to have big price implications everywhere except in countries that produce natural gas for themselves. Read the United States. Now, that means in the United States, the 2 to $3 range we’re in right now is more or less normal. We’re not going to go above five for any more than very short periods of time, because what we’ve discovered is that the shale gas guys can bring on well, wells in a matter of weeks.

If you remember your shale history back between 2004 and 2011, roughly, it was all about the natural gas. And then in 2011, the 2013 oil really came into its own and natural gas faded, not because we were producing it, but because we were producing it as a byproduct of oil production. What we saw in calendar year 2023 when prices were going up is that the shale guys went back to the old natural gas fields and were able to produce using the tricks they’d learned in the shale oil fields the last ten years.

And that pushed down the cost of production and push up the volume of natural gas that was produced by massive volumes. And we basically got back to a balanced market. Now, the United States does have takeaway capacity to get some of that natural gas to international systems. We have roughly 10 billion cubic feet of pipeline capacity, mostly in Mexico and about another 10 billion cubic feet for LNG, which is mostly going to Europe now.

That’s in comparison to 120 billion cubic feet of overall production, which is a number we now know that we can increase in fairly quick succession when we need to. So again, prices should be lower for a longer. We might have those occasional spikes, but then the shale guys will just drill and bring the price right back down. Now, why does that matter to you?

Three big reasons. Number one, natural gas remains the number one fuel source for electricity generation in this country. About 40% of the total. So anything that requires electricity, which is almost everything, natural gas is the solution, at least in the mid-term. And since the United States needs to roughly double the size of its industrial plant. As the Chinese fade away, we basically need 50% more electricity, and natural gas is going to be a huge component of that.

Second, let’s say you don’t like fossil fuels at all. Let’s say that you’re a greenie and you like solar and wind. Well, you should still like natural gas because when the wind doesn’t blow or when the sun doesn’t shine, which happens, you know, every night, you need a partner, a fuel in order to keep the lights on. And natural gas combined cycle power generation facilities can spin up and spin down in less than 15 minutes.

So they are the best partner for GreenTech that we have. And while the Californians don’t like to say it out loud, about half of their energy that they generate within California itself comes from natural gas, specifically because of this pairing capacity batteries cost an order of magnitude more. They don’t last very long and they have some other problems with their construction That is ugly from any number of strategic and green points of view.

Natural gas is a known and as long as we’re going to be moving towards wind and solar for most of this country, even in increments, natural gas is the logical partner for all of it. And then the third thing is a little bit more esoteric, and that has to do with what happens in manufacturing. Once you decide you want to really get into everything in globalization, we have broken up the supply chains.

Energy comes from someplace, iron ore comes from someplace, steel comes from someplace else, plastics comes from someplace else. It’s brought together for assembly, different locations. As the world breaks apart and we have a more national or continental system, more and more of those intermediate steps need to be done at home or near home. And a lot of those intermediate steps use raw materials that are made from natural gas.

So natural gas makes naphtha, makes polyurethane makes plastics, naphtha makes fertilizers and pesticides, makes agricultural products. Natural gas is the base material for a lot of this stuff. And now the United States is the largest producer, supplier and exporter of all of those intermediate products. And what we’re seeing now is the U.S. moving up the production chain, moving in a greater value added production system for all of this so that we can still do the classic manufacturing and have the entire input system at home.

So to have natural gas at these price levels for a very long time is great and it’s going to be a very long time. We largely stopped looking for natural gas about ten, 15 years ago because we knew at that time we had over 30 years of supplies at current rates of production. And we proved in 2023 that it’s pretty easy to bring even more on line.

So this is going to be the norm for the United States while it goes through these massive re industrialization phases. And natural gas will both power fuel and provide the base materials to make all of the possible. And that is not going to be replicated any where else. No one else can produce natural gas at the price point that the United States can.

And no one else has. In natural gas production facilities relatively close to the population centers like the United States does. So this this is our new normal, and it’s going to provide the bulwark for American industry for at least the rest of this century.

How To Do Greentech Well: The SunZia Wind Farm

The largest Greentech power generation system in the hemisphere is under construction in New Mexico. SunZia has raised $11 billion for this project and aims to generate 3.5 gigawatts of wind power for the NM, AZ, and CA energy markets.

This is a massive step for the green transition, and it will play a pivotal role in bolstering green power generation within the US. You might be wondering why they chose wind power; well, it’s more cost-effective than solar, more reliable, and tech advances have enabled us to tap into more stable and powerful currents.

The transmission component of this project is important to; it shows that the energy can be generated and captured in regions with low demand and moved across state lines into areas with high demand. We’ll have to wait and see how this will work in practice, but this is looking like a ‘win’ as of now.

The SunZia project is just the tip of the spear as we’ll continue to see more of these projects pop-up soon, but this is a great start for the green transition. The first energy from this plant isn’t expected to be generated until 2026, so don’t pop the bubbly quite yet.

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.

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Hey, everybody. Peter Zeihan here coming to you from Colorado. Now, I get a lot of flak for never having good news. So I figured, you know, here, here’s something fantastic that’s happened over the holidays. There’s an organization called Sun Zia, which is a company that produces and transmits electricity that has closed funding and started construction on what will be the largest green tech power generation system in the hemisphere, 3.5 gigawatts, which in electrical terms is huge.

Why does this matter? A bunch of reasons. Number one, $11 billion is how much money they had to raise. Raising money these days is difficult because the baby boomers are majority retired. All of their capital, all their savings has been put into relatively static things like cash and T-bills. And so if you’re trying to raise funding for anything, it’s gotten a lot more expensive.

In addition, unlike if you were to build, say, a natural gas power plant or anything that’s fossil fuel based with those systems, fossil fuels, only about one fifth the cost of your of your full lifecycle cost for your facility has to be raised at the front end to pay for construction. But most of it is instead raised from fees when you’re generating the power as you go.

Instead with green tech, two thirds of the cost is upfront because there’s no fuel costs, but the upfront cost is much higher. So you’re talking about two thirds of the total value of the entire lifecycle of the project has to be raised before day one. And so doing that at all is difficult. Now the capital costs of roughly tripled, but Sunsilk was able to pull it off.

So our number one big achievement for the capital cycle. Number two, the size 3.5 gigawatts, biggest in the hemisphere. If we are going to do the green transition, we need to increase the amount of power generated in the country by at least 50%. This is a nice little bite taken out of that. But from my point of view, if we’re going to deal with the post China world and expand the industrial plant to manufacture everything we need, we need to expand it by another 50%.

So regardless, if you’re a green, if you’re pro-development or both, this takes us a significant step forward. We still need another 500 of these steps, but you know, we’re going in the right direction. Okay. Number three, what it is, it’s wind and it’s in New Mexico. So wind, as a rule, is much more cost effective. And solar in large part because every time the sun goes down, all those solar panels just become paperweights, whereas the wind blows at night.

In addition, while we have had incremental improvements in the capacity of photovoltaic cells over the last 15 years, it’s nothing compared to what has gone on with wind. It used to be that wind turbines were 100 feet tall.

This year we’re going to have prototypes for ones that are thousand meters, 1000 feet, 300 feet tall. You know, just massive, massive structures. And they generate more than an order of magnitude more power than the old ones do. And more importantly than their size is their height, because they’re reaching wind currents that are far more stable and far stronger.

And so we’re seeing places in Texas, in Iowa, and now in New Mexico that are using some of these taller turbines to not just generate intermittent power, but baseload power. And that’s one of the big problems with green tech. If the wind stops or the sun goes down, you’re kind of out of luck and you have to switch to a more conventional system or a battery system, which is much more expensive.

But if you are tapping a wind current, that never stops, you can use it for baseload and avoid both of those problems. And that’s part of the goal here for the Sun Zia project. But fourth, and I think most importantly is that unlike almost every green tech project that we have done in the United States to this point, a huge portion of his own solar project is transmission.

They realize that there aren’t a lot of people in New Mexico and Albuquerque can only suck up so much power. And so this project includes massive transmission lines that go into Arizona and link into the network that goes into Los Angeles. And of the three and a half gigawatts of power generation that they’re anticipating all but a half a gigawatt of it is for export to the Arizona and California markets.

And the fact that this taps into the L.A. market is beyond awesome. I don’t know how many of you have heard of California, but doing business there is almost impossible. Electricity demand is hardly encouraged, but in many ways, electricity generation is flat out illegal. Very heavy regulatory environment. The state is also very power hungry and they import about a third of their electricity because they’ve made it very difficult for producers to operate in their home state.

Arizona is by far the single largest supplier they have. And every night when the sun goes down and all those panels of Californians built stop working, ten gigawatts of fossil fuel power comes from Arizona across the border, flooding into the L.A. zone. The Sun Zia project will now be able to put roughly three gigawatts of power into that network.

It doesn’t solve it at a stroke, but it’s a much more sustainable program from an environmental point of view than anything that we have right now. So, you know, a great step forward. One of the big things that we forget about in the wind and solar is not just the intermittency. It’s just that not everybody is places sunny and not every place is windy and most people don’t live in those locations.

So our best wind locations are the Great Plains from eastern Montana, North Dakota, going down to the panhandle of Texas and west Texas. Our best solar zone is from southern California. Go into west Texas as well. New Mexico is on the edge of that great Plains region, great wind potential, great solar potential. But there aren’t a lot of people in that entire area.

You got a wire somewhere. And this is one of those projects that has managed to work out the details of crossing state boundaries, two of them, and getting power to where people actually live in Phenix and Los Angeles. So we need many, many, many, many, many, many, many, many, many more of these for this to go. But the fact that we have our first really big one that’s already started construction.

First power is expected in 2026. It’s a great start.

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Disunited Nations

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The Absent Superpower

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Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

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The End of the World is Just The Beginning

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FOR MORE ON THE FUTURE OF ROMANIA, SEE DISUNITED NATIONS

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