Russia has the world’s largest natural gas reserves and is the world’s top gas producer and exporter, supplying a quarter of the European Union’s consumption. The Russian bloc—Russia and the ”stans”—accounts for nearly two-thirds of Europe’s imports, including those of the Baltic states (Estonia, Latvia, and Lithuania), Belarus, and Ukraine.
Russia’s dominance in natural gas is even greater than Saudi Arabia’s in oil. What is more, because it supplies a growing share of the gas going to Asia’s fast-industrializing northeast, Russia is in a position to dominate the Eurasian gas markets for a generation to come, deciding who gets how much, when, and at what price.
Russia is also a major oil producer, jockeying for position with Saudi Arabia for the distinction of being the world’s largest, but it has little influence on the world oil price because its oil exports are relatively small. It is running down its reserves, much as the United States has been depleting its oil stocks.
The United States depends on Canada for natural gas almost as much as Europe relies on Russia—but with an obvious and critical difference. Because of deeply shared political and social values, the United States basically trusts Canada. That sense of a shared ethos no longer prevails in relations between the major European countries and Russia [see the commentary "Gas Pains" in Update, this issue].