If the pipeline crossing Georgia, bringing approximately a million barrels of Caspian oil a day to the West, remains shut down for much longer, it could result in higher oil prices.
"We could see $4 a gallon gasoline again," warns Edward Yardeni, an American consulting economist.
The 1,100-mile Baku-Tbilisi-Ceyhan (BTC) pipeline provides only about 1 percent of the global demand for oil. But, as Prof. Michael Klare of Amherst College notes: "There's not a lot of spare [crude oil] capacity" in the world.
In the long-running struggle for control of Caspian oil and gas and influence in the ex-Soviet states of that region, the clash has been a blow to US clout.
"The Russians come out of this as winning this round," says Professor Klare. "They are the power brokers in this part of the world…. But there will be more skirmishes to come."
Klare, author of "Rising Powers, Shrinking Planet: The New Geopolitics of Energy," sees the conflict as "not a battle for democracy," as portrayed by Washington. "It was a battle for energy," he says.
In his State of the Union Address in 1980, President Jimmy Carter proclaimed what has become known as the "Carter doctrine." It stated that the US would use military force if necessary to defend its national interest in the Persian Gulf region. Carter saw the Soviet invasion of Afghanistan at that time as "a grave threat to the free movement of Middle East oil."
President Clinton, as Klare sees it, expanded the Carter doctrine "more or less" to include Caspian oil. The BTC pipeline, taking crude from Azerbaijan through Georgia to the Turkish port of Ceyhan, where it is loaded on tankers for the international market, was "Clinton's brainchild," says Klare.
President Bush has heated up what Klare regards as a struggle over vital resources, rather than a throwback to the cold-war era or classic balance-of-power politics. In that struggle, the US helped Mikheil Saakashvili win the presidency in Georgia after its 2003 "Rose Revolution" and helped build up and train Georgia's armed forces. When the American-educated Saakashvili attempted to show his mettle and restore the breakaway regions of Abkhazia and South Ossetia to Georgia's control, the Russians took the opportunity to show who is boss.
Klare worries that an American military adviser might be hit inadvertently by a Russian bomb, raising US-Russia tensions further.
"Throughout the Caucasus, the US has been striving to establish pro-American governments for strategic reasons," says William Beeman, chair of the anthropology department at the University of Minnesota. One reason aside from Caspian oil, Professor Beeman suspects, is to provide a staging area for possible attacks on such perceived enemies as Iran and Syria.
The $4 billion BTC pipeline, managed by and 30 percent owned by British Petroleum, was routed through Georgia to avoid sending Caspian oil through Iran, Afghanistan and Pakistan, or Russia. A 10-mile pipeline could have connected Caspian oil to the well-developed Iranian pipeline system. Beeman charges that millions in government bribes changed hands to place the pipeline in its tortuous route.
Georgian authorities charged Russia with trying to bomb the pipeline last Tuesday, a pipeline that had been buried deep in a trench for the sake of security. BP stated it was unaware of such bombings. In any case, the BTC flow of oil – about $1 billion worth every 10 days – had already been stopped by an earlier fire at a facility in Turkey. Kurdish rebels, known as the PKK, claimed the fire was their responsibility.
There have been plans to take the same Georgia route for a Caspian natural-gas pipeline ending in Europe. Klare considers the Russian action as partially a warning that this is not a good idea. Such a pipeline would offer serious competition to Gazprom, the giant Russian oil-and-gas conglomerate. Russia supplies one-quarter of the oil and half the natural gas consumed in Europe, and the revenue is seen as key to Russian prosperity. The European Union has been keen on the Georgia plan as a way to gain bargaining power and reduce the risk of supply cutoffs.
But the Russia-Georgia war may have reduced the prospects for such a gas pipeline getting financing and European backing.
"I wouldn't hold my breath," says Klare. He advocates that the US, EU, Russia, and the Caspian states develop a comprehensive regional energy plan for Caspian oil and gas.