In what is almost a miraculous turn of events, an off-the-cuff comment by Secretary of State John Kerry may provide a way out of war for the United States. When asked if there was a way for Syria to avoid a military strike John Kerry said in effect that if Syria gave up its chemical weapons within a week then a strike could be avoided. Then he seemed to give that look like, right, like that is going to happen.
But Russia latched onto the comment. Russian Foreign Minister Sergei Lavrov made a proposal and said that "We are calling on the Syrian leadership not just to agree to put chemical-weapons stores under international control, but also to their subsequent destruction, as well as fully fledged accession to the Chemical Weapons Convention." At first then the State Department said we weren’t serious about that, but on second thought if the Syrians agree this might be a face-saving way for the United States to get out of the box that we were painted in. The Syrian government said it welcomed the proposal by Russia to avoid a U.S. military strike and they would be happy to put the international community in control of the chemical weapons that they denied they had in the first place.
The White House seemed to breathe a sigh of relief and said they would take a hard look at the proposal. President Obama invoked Ronald Reagan by saying trust but verify. He also said that the Syrians would have never offered to give up their weapons if it were not for the threat of force.
So if war is avoided, who will get the credit? Secretary of State John Kerry? Will the Russians be seen as peacemakers? Will President Obama get the credit for his pressure on the regime? Or maybe it should be Pope Francis for his prayer vigil, because let's face it, this is a miraculous turn of events.
It sure turned oil lower. Most of the impact was seen in Europe, not only in the Brent crude but a sharp reversal in the gas oil. Fears were building that supply of gas-oil would tighten with a conflict as we headed into winter, but now that risk has diminished. Oil prices are down even as global stock markets soar, not only on strong global economic data but relief that war could disrupt the global economic recovery. Still there are worries about Libyan supply but now with the risk of war lessened perhaps the markets will worry less.
Natural gas is getting support on hot temperatures and increasing storm activity in the Atlantic. Nat gas demand from power generators has been rising. Of course the rest of the world still sees our natural gas price as a bargain. Reuters news, Japan's Toshiba Corp has agreed to buy liquefied natural gas from the proposed Freeport LNG export plant in Texas, joining the ranks of global companies seeking to import some of America's growing fuel supplies. Under the 20-year agreement, Toshiba will buy 2.2 million tonnes of LNG each year from the Freeport plant's third production unit, known as a train, from late 2018, Freeport said in a statement.
Output from the first two trains, which are expected to start in early 2018, pending regulatory approvals, has already been sold to Britain's BP and Japanese utilities Osaka Gas and Chubu Electric. Companies across the world are queuing up to import U.S. natural gas, supplies of which are at record highs thanks to horizontal drilling and hydraulic fracturing that have unlocked vast reserves of the fuel from shale rock formations, pushing U.S. prices far below global levels.
Meanwhile in Asia, LNG prices have risen since the Fukushima disaster in March 2011 closed most of Japan's large fleet of nuclear power stations and left the country scrambling for substitute fuel for power generation.
Cheap U.S. gas has attracted other Japanese companies, as well as firms in India and Europe, that have agreed to buy LNG from other proposed export plants in the United States. So far, only three of the nearly 20 plants seeking to export LNG in the United States have approval to export to countries without a free trade agreement with the United States, and only one - Cheniere Energy's Sabine Pass in Louisiana - has a construction permit.
Freeport has full export approval from the Department of Energy but is awaiting a construction permit from the Federal Energy Regulatory Commission, which Freeport expects will be granted in the first three months of 2014.