SO SAD, VLAD: Russia Waking Up to Shale Realities.

Russia has long relied on its enormous oil and gas reserves to not only heat and power its homes, but also to fund its government. But as blessed by resources as it has been, it has also displayed an impressive ability to stay behind the curve of an energy landscape that is changing now faster than ever. Nowhere is this more true than with its handling of the recent shale revolution, which has to this point consisted of denials and dragged feet. . . .

Unlike China, Russia has been drilling for oil for decades, so much of the requisite infrastructure—the pipelines, the refineries, the roads, the workforce—is already there. Unfortunately for Rosneft, it looks like Siberia’s shale plays lack the clean “wedding cake” geology that America enjoys, that allows for relatively simple and predictable horizontal well drilling.

Russia has so far been extremely slow to change course and recognize the potential new sources of energy fracking has unleashed on the world. Taking the short-term view, this isn’t a huge problem, as it still has enormous conventional sources of oil and gas. But oil and gas output is stagnating, and once hugely productive fields are petering out. Given that, and given the fact that Russia has the world’s largest shale oil reserves and ninth largest shale gas reserves, continuing to sluggishly adapt will have huge opportunity costs for the waning global power.

I can live with that.