The Weekly Wrap: Feb. 4, 2011

The 800-pound Saudi gorilla: Egypt is a significant country — when its people took to the streets and shook the regime of President Hosni Mubarak to the bone, observers gave serious thought to the possibility that any Middle East autocracy could be up for grabs. Tunisia’s ouster of President Zine el-Abidine Ben Ali led to Egypt, but simply did not send the same fears up the spine of the region’s strongmen. Yet as the week ends with Cairo’s so-called Day of Departure and the White House caucuses on how to smooth Mubarak’s exit, what is truly on the minds of decision-makers? For many of them, it’s Saudi Arabia. If unrest spreads there, all bets are off in global markets of all types, and particularly the oil market. Saudi Arabia produces 10 percent of the world’s crude and in addition is the main "spare capacity" cushion keeping prices relatively stable. The calmest voices among us point out that Saudi — and really the rest of the big petrostates in the Persian Gulf — is a completely different case from Egypt, Jordan, Yemen, and other states under threat from internal discontent. The main difference is the power of the purse — the Saudi regime has plenty of cash to spread around so that it does not have a gigantic, teaming mass of poor with a long history of deep, festering, and unresolved grievances. If you have not yet seen it, it’s worth watching Christiane Amanpour’s interviews with both Mubarak and his new vice president and intelligence chief, Omar Suleiman:

Big Oil’s fork in the road: How to navigate the uncertain shoals of oil over the next two and three decades? The smartest minds in Big Oil are not sure and at the fork of the road have all taken different paths, write Sheila McNulty and Ed Crooks at the Financial Times. BP has shrunk and gotten into bed with Russia; ExxonMobil and Shell are turning themselves into natural gas companies; Chevron is sticking with the orthodox model of hard-core exploration; and ConocoPhillips has turned away from the Big Oil, grow-as-big-and-burly-as-possible model and sought big returns by being a Medium Oil company. So far, the market has rewarded Conoco the most, pushing up its share price by a third over the last year; Shell is up 26 percent, Chevron by 19 percent, but Exxon’s up by just 7 percent. BP is down 12 percent.

Pipeline politics in Europe: One must admire Europe’s newfound determination to create another source of natural gas and prevent Russia from exerting undue petropower on the continent. Despite history suggesting a quixotic effort, European Union Energy Commissioner Günther Oettinger has gotten both Azerbaijan and Turkmenistan to agree in principle to supply gas to the long-proposed Nabucco natural gas pipeline. Now, Oettinger is attempting to embarrass the pipeline’s European partners into lining up the financing and starting construction of the $11 billion line before the two Caspian Sea republics sign actual commitments to ship their gas volumes, Reuters reports. The Turkmen and Azeris say the Europeans have to move first. The Europeans say the Caspian republics do. History suggests that the Europeans are right to wait — the Turkmen and the Azeris aren’t going to sign anything until Russia informs them that there will be no punishment for doing so. Next stop for Oettinger: Moscow.

The groundhog factor: Punxsutawney Phil, a groundhog from Pennsylvania, had bad news for natural gas producers, but good news for the rest of us — winter will end early, and spring will be upon us in no time. Why do we bother occupying our time with the thoughts of a rodent? According to Wikipedia, "The Groundhog Day celebration is rooted in a German superstition that says if a hibernating animal casts a shadow on Feb. 2, the Pagan holiday of Imbolc, winter will last another six weeks. If no shadow was seen, legend said spring would come early." In the interest of balance, we offer up Phil and a rival, Woody the Woodchuck, who did see her shadow, indicating six more weeks of winter.