Exxon Mobil has considerably raised its forecast for the global switch to natural gas from far-dirtier coal. Exxon -- whose energy models have much influence because of the intellectual firepower the company's forecasters brings to bear -- says that not only will natural gas surpass coal use in the next two decades, but it will also start to come close to oil consumption, as Angel Gonzales reports at the Wall Street Journal. The big takeaway from Exxon's 20-year forecast, released today: China's natural gas demand will rise six-fold.

These are enormously consequential forecasts. We've been discussing what we think is coal's dim future for some months. Energy forecasts going forward are almost entirely founded in China's voracious appetite; it's been presumed that China will account for some 90 percent of the increase in global coal use over the coming two or three decades. But that's never made sense, unless you presume that China's Communist Party has a death wish. Unrest has already broken out in China over pollution, and it is simply absurd to conclude that the population will tolerate an order of magnitude greater coal smoke, or even more.

As we've discussed, the direction of the global energy supply will relatively soon trigger a sectoral shift in how China produces electricity. We will have supply-push demand: So much natural gas is sloshing around the world -- from Qatar, Australia, Yemen, and now possibly liquefied natural gas from the United States -- that China will shift massively to gas-fired electricity plants. This has enormous implications in terms of climate-change forecasts. In a nutshell, global warming may be less of a problem than a lot of people currently think because natural gas emits one-third of the CO2 as coal.

Duke Energy's proposed $13.7 billion purchase of Progress Energy announced this morning could be a blow to Big Coal, which has ambitions to remain the planet's preeminent fuel for electric power. Both Duke and Progress have big ambitions for nuclear-fueled power plants, and Duke CEO Jim Rogers is among corporate America's loudest advocates for sharply slashed CO2 emissions.

Here is Rogers getting grilled by comedian Stephen Colbert:

Much in the climate change arena has gone topsy-turvy in the last two years. Back in 2009, China and India seemed to be among the main roadblocks to a global accord on reducing the emission of heat-trapping gases; now, China is aggressively lowering its growth of CO2 emissions absent corresponding cuts in the United States. Back then, it was an article of faith that the U.S. -- the world's second-largest CO2 emitter -- was going to put a price on carbon, and lead a global campaign against Arctic melting; among the leading such voices were corporate giants including ExxonMobil. Now, climate skepticism is ascendant, Republican leaders vow to halt Obama Administration policy to begin regulation of CO2 emissions, and corporate green-speak is heard much less in the halls of power, as Anne Mulkern reported at Greenwire.

Read on

For the last year, Deutsche Bank's Paul Sankey, one of the best long-range energy minds on Wall Street, has been distributing a series of provocative, deeply researched, and forward-looking notes to clients under titles like "The Peak Oil Market" and "The End of the Oil Age." Last week, Sankey produced a sixth note called "2011 and Beyond -- A Reality Check." Among the takeaways: As of 2010, the new electric car age is coming upon us faster than expected -- far beyond this year's conspicuous arrival of the General Motors Volt and Nissan Leaf, and the race among the world's industrial nations to dominate this technology. Converging even more rapidly, says Sankey, are far higher oil and gasoline prices, starting in 2012. Such shifts could have enormous geopolitical ramifications -- as a consequence, some countries will become poorer, and some richer, with corresponding impacts on their global influence.

Starting with the second forecast from this 59-page report, 2010 has seen a comparatively gentle respite in an otherwise unprecedented, decade-long period of turbulence in oil markets. According to Sankey, this calm is about to break.  Sankey's forecast is based on the salient factor of "spare capacity." (If you are already familiar with the term, skip to the next paragraph. If you aren't, read on.) This refers to how much oil the world's petrostates can produce above and beyond current demand. So for instance, Saudi Arabia pumps about 8 million barrels of oil a day, but has dug enough wells in enough new fields to produce 50 percent more than that -- or 12 million barrels a day -- if it needs to. That excess Saudi productive capacity of 4 million barrels a day, plus about 1 million barrels a day of extra productive capability elsewhere, adds up to a global surplus of about 5 million barrels a day of spare oil production capacity -- the available volume above and beyond the 87 million barrels of oil a day consumed around the world.

Price-setters -- meaning oil traders -- see a lot of spare capacity as a cause for calm. They remain serene in the face of bad weather, pirate attacks, or pipeline explosions -- the sort of events that, in the 2006-2008 period (when there was much smaller spare capacity) sent them into paroxysms of panic, and accordingly sent oil and gasoline prices through the ceiling. This was because no one could say whence oil would come to fulfill demand. Since the world now has a cushion, we have the relative tranquility of 2010.

But Sankey effectively says that it's been a false calm. Reality is about to strike, he says, based on the following math: Global spare capacity is actually not 5 million barrels a day, but 4 million barrels a day when one takes into account what countries really produce, versus what they report. From there, Sankey projects that global demand will rise by 2.5 million barrels a day next year, and an equal volume in 2012. Looking at the future through this lens, you can see how we will rapidly work through our spare capacity buffer, and arrive right back on the knife's edge.

Read on

Five countries, oil entrepreneurs big and small, and activists of various types have all weighed in on the biggest remaining motherlode of energy on the planet: the Arctic. Climate change is opening up this region, which holds an estimated 25 percent of the world's remaining oil and gas, according to the U.S. Geological Survey. One principal question mark in this ballyhooed rush north has been the doubts of environmentalists, who note that in the case of a spill, the Gulf of Mexico would be child's play compared with the Arctic, where spills dissipate far less easily and cleanup efforts are far more difficult than they are on the Louisiana coast.

But this is just one of the challenges facing Arctic development. As the biggest oil companies in the world are finding, energy trends themselves are at least for now working against the Arctic. Specifically, billions and billions of cubic feet of natural gas could end up stranded in Alaska, Canada, and Russia because there is so much competing supply around the world.

In the Wall Street Journal, Phred Dvorak and Edward Welsch report on Canada's backing of a 740-mile natural gas pipeline from its Northwest Territories -- which border the Arctic -- to southern markets, including the United States. Called the MacKenzie Gas Project, this $16 billion pipeline has partners including ExxonMobil, Shell, and ConocoPhillips. The three major fields there hold the gas equivalent of 1 billion barrels of oil. Now, with the Canadian government's green light, the companies themselves must decide whether to proceed -- a matter the government says it will take up in about three years, once it figures out the precise costs and engineering requirements.

Read on

A nod to $100 oil, and another sign of OPEC's wane. The Organization of Petroleum Exporting Countries (OPEC) is still closely watched for the minutest shift that could shake up oil prices, but yet again it's clear that the group is trying simply to stay ahead of more powerful market forces. The latest evidence came this week when OPEC members -- who control 40 percent of the world's oil supply -- gave their nod to $99.99-a-barrel oil prices. (This comes a month after the group expressed contentment with $90-a-barrel oil.) OPEC Secretary-General Abdalla El-Badri said that $100-a-barrel oil would be a sign that prices have gone out of whack with fundamentals, and that OPEC should act, presumably by loosening up its quota and adding supply to the market, report Bloomberg's Juan Pablo Spinetto and Nathan Gill. This week, oil momentarily crossed over the $90-a-barrel line before falling back. As for O&G, we are betting on the contrarians who believe that the giddiness is premature, and that prices will remain at current (historically high) prices in the coming year.

The big spend. Oil junkies have fretted that petroleum companies have so curtailed their exploration spending in recent years that we are headed for a huge jump in prices starting in 2012 and stretching through the decade. Not so fast: Yesterday we learned that Chevron, for one, is seriously stepping up its investment next year. The company says it will spend a full 20 percent more than planned, or $26 billion, to drill a lot more in Australia (gas) and the Gulf of Mexico (oil), among a few other places, Sheila McNulty reports in the Financial Times. This puts Chevron in the same league as top-rank spender ExxonMobil, which already said it planned to lay out between $25 billion and $30 billion a year for the next five years on exploration and other capital expenditures.

A newly cautious BP? The first possible signs of a new, far more careful BP showed up this week in the company's decision to forgo drilling in deep water off the coast of Libya until it can switch out the rig planned for the project. Eight months after the disastrous explosion of its Macondo well in the Gulf of Mexico, BP says it will not use Homer Ferrington, a rig owned by Noble Corp. that's already on site in the Gulf of Sidra, but Deep Ocean Ascension, a rig belonging to Pride International. The Pride rig is currently being outfitted, the FT's Sylvia Pfeifer reports, and drilling is now supposed to begin next year. No one is saying why Ferrington is more suitable than Ascension.

Argentina's big sale to China. Chinese oil companies continue their Latin American buying binge. In Argentina, a Sinopec subsidiary agreed to pay Occidental Petroleum $2.45 billion for oil and natural gas fields, report Jim Bai and Farah Master of Reuters. The deal includes 393 million barrels of oil equivalent (oil and gas) in what's known in industry argot as proven and probable reserves. The fields produced some 51,000 barrels of oil equivalent last year - a respectable though not eye-popping volume. But the big news is that this is just China's most recent deal in the region. In all, Chinese companies have spent $13.3 billion in Latin America on oil and gas deals this year; that is compared with no deals the previous year.

In the coming weeks, we will see the rollout of the two most-watched entries in the global electric-car race, the Nissan Leaf and the Chevrolet Volt. Both are in the headlines today, and here is the detail that caught my attention: The Leaf, writes Nick Bunkley in the New York Times, will get the equivalent of 99 miles per gallon.

For months, a drumbeat of pessimism has threatened to drown out earlier optimism about the possibility of an electric-car juggernaut over the coming decades. Electric cars and hybrids will overwhelm power grids, we are told. Governments, specifically President Barack Obama and the leaders of most of Europe, Japan, and China, are too far ahead of consumers, warns the Economist. Few will buy a car that could stall on the way home from work, U.S. News predicts. At 24/7 Wall Street, Douglas McIntyre writes, "The dream of a highway populated by electric and other low emissions cars may be no more than hope. If wishes were horses, all the beggars would ride."

And yet, that figure -- 99 miles per gallon, calculated using an Environmental Protection Agency formula in which 33.7 kilowatt hours equals a gallon of gasoline  -- tips the scales a bit in my eyes. We've all been on the showroom floor, and after admiring the design lines of this or that model, we take a sharp look at the sticker, and the prominent display of the premier maintenance cost we will face, which is fuel. Consumer psychology is a tricky thing, but suffice it to say that the number 99 is a lot different from 28 or 36. The EPA hasn't certified what the Volt will get on the road, but it's going to be in the same ballpark, and I think that is going to turn a lot of heads.

In the Financial Times, Ed Crooks writes that Nissan CEO Carlos Ghosn is already doing a victory lap, arguing that his $5 billion bet on electric cars has been vindicated. That's a bit premature. But pay attention to the number 99. It's important.

James Giffen, the oil dealmaker at the center of what was once the largest foreign bribery case in U.S. history, is officially a free man.

The 69-year-old former oil adviser to Kazakhstan's president, accused of diverting $78 million from oil companies to the Kazakh government, waited out more than a dozen federal prosecutors and sat through some two dozen court appearances and five trial dates over the course of seven years. Today, the effort paid off. Three months after prosecutors announced a stunning capitulation, dropping all foreign bribery, money laundering, and fraud charges against Giffen in exchange for a guilty plea on a misdemeanor tax charge, U.S. District Judge William Pauley ordered no prison time and no fines in sentencing proceedings at a Manhattan courthouse.

In handing down the non-sentence, Pauley seemingly validated the argument to which Giffen's lawyers had clung since 2003: that whatever crimes Giffen had allegedly committed occurred while he was a highly valued foreign asset of the American intelligence. "Suffice it to say, Mr. Giffen was a significant source of information to the U.S. government and a conduit of secret information from the Soviet Union during the Cold War," Pauley said today.

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Giffen may have been lesser-known than the other businessmen-cum-criminal-defendants of recent decades, but he was equally colorful, a swaggering, coarse-talking, heavy-drinking womanizer and a charismatic fixture on the Caspian Sea. He arrived in Kazakhstan in 1992, but the trajectory that ultimately landed him there began in 1969, when he started traveling to Moscow as an aide to a Connecticut metals trader. Giffen worked his way up to become a major player in a U.S-Soviet business association with top-level political ties in both Washington and Moscow. When the Soviet Union collapsed in 1991, business in Russia dried up, and Giffen moved on to Kazakhstan, which was quickly becoming one of the hottest oil plays on the planet.

Giffen managed to ingratiate himself with a man he called The Boss: Kazakh President Nursultan Nazarbayev. He became Nazarbayev's chief oil negotiator and, prosecutors alleged, his personal banker. While honchoing some of the era's biggest oil deals, he also diverted some $78 million in payments made to Kazakhstan by now-dead companies like Mobil, Amoco, and Texaco into Swiss and other bank accounts that he set up in the name of Nazarbayev, other senior Kazakh officials, and their relatives, prosecutors alleged. (U.S. diplomats said that Nazarbayev, an unindicted co-conspirator in the case, so dreaded being tarnished by a Giffen conviction that both he and his envoys pleaded repeatedly for the George W. Bush Administration to order the case dropped.)

The case seemed open and shut, since the prosecutors presented a detailed paper trail -- provided by a Swiss magistrate -- of Giffen slicing payments into tiny discrete pieces for transfer into secret Swiss bank accounts, rather than shifting them as a whole, a classic method of money laundering. Even at their most voluble and expansive in court, Giffen's lawyers made no attempt openly to dispute the prosecution's facts. They simply kept repeating that, whatever Giffen may have done, he was taking orders from the Kazakh government -- a sovereign state entitled to its own ideas of legality -- and otherwise serving the patriotic interests of the Central Intelligence Agency.

It was an audacious defense that many thought verged on the preposterous. For one thing, CIA officers of the era deny that Giffen was anything of the sort -- he walked into CIA headquarters on his own volition and talked to agency officers about Kazakhstan, they said, but that was very different from being a trusted asset on an informal assignment. In short, they asserted, Giffen was simply another dude talking.

The CIA, however, appears to have refused to hand over many -- if any -- documents sought by the defense. Judge Pauley had ruled that such documents were obligatory if Giffen were to have access to his rights to adequately defend himself. So the prosecution was left with having to drop the charges.

In his sentencing remarks, Pauley said that he had had access to classified documents that no one else in the courtroom had seen, and that they largely validated Giffen's claims. "He was one of the only Americans with sustained access to" high levels of government in the region, Pauley said. "These relationships, built up over a lifetime, were lost the day of his arrest. This ordeal must end. How does Mr. Giffen reclaim his reputation? This court begins by acknowledging his service."

[Updated]

Big Oil was born in Pennsylvania, and a growing number of the industry's major players seem convinced that its future is there, too -- specifically, in the natural gas deposits of the Marcellus Shale formation. The latest evidence? Chevron just dropped $4.3 billion on it. The company is acquiring Atlas Energy, a Pittsburgh-based independent producer that has an estimated 9 trillion cubic feet of gas to its name in the region, which geologists think may contain at least 262 trillion cubic feet of recoverable gas.

Today's deal makes Chevron the third member of the Big Oil elite to seek refuge from an increasingly stormy oil business in the United States' burgeoning shale gas industry. In December Exxon Mobil bought the shale gas company XTO for $41 billion. In May, Royal Dutch Shell picked up East Resources, another company active in the Marcellus Shale, for $4.7 billion. On news of the Chevron acquisition, shale gas stocks are up 3 percent today. The Center for Strategic and International Studies' energy policy expert Frank Verrastro is also bullish on the deal. He emails:

It reinforces Chevron's move into unconventional gas (like Exxon, BP, Total, Shell and Statoil) and positions them well as gas is looked to play a significant role in a cleaner fuels economy. In Atlas's people, Chevron also acquires the expertise in operating in the Marcellus (and elsewhere). Nice package.

A few things are worth noting about the deal. One is how differently it's being received than Exxon's XTO acquisition, for which the company had to endure some grumbling. Critics said the oil giant paid too much and offered too few opportunities for the efficiency gains for which Exxon's acquisitions are known; Exxon's CEO, Rex Tillerson, countered that it was a long-term move, not a short-term one.

The second is what an international enterprise the shale gas business has become. Chevron's deal makes it a partner with an Indian company, Reliance Industries, which was working with Atlas in Pennsylvania. As Verrastro notes, Norwegian giant Statoil is investing in U.S. shale drilling, as is the Chinese National Offshore Oil Company (CNOOC).

The third is that Chevron must not be overly concerned about the risk to their long-term business posed by environmental concerns over shale drilling. The process of hydraulic fracturing, or "fracking," in which chemical-laced water is used to loose the gas from the shale, is controversial enough to have spawned its own documentary; when Exxon signed its XTO acquisition, it included a clause by which the oil company could walk away from the deal if the technology proved problematic. "Chevron and Exxon, they may know how to manage these risks, bring the best practices to bear," Lucian Pugliaresi, the president of the Energy Policy Research Foundation, says. "They may be the right companies for these projects."

Over at the New York Times, I'm part of a panel discussing whether the United States needs to re-create a homegrown rare-earths industry even though such mining can be highly polluting. One point I make is that so many companies are responding to China's actions that we are actually in danger of a rare-earths bubble in a few years. The trick will be bridging the gap between the current shortage - in which China enjoys a near monopoly -- and a future period of abundance.  Reuters raises the same point in an interview with a clutch of experts. One answer seems likely to be found in countries like South Korea, which says it has found a new rare earths deposit.

There has been talk that China is going to further tighten rare earth exports next year. On Friday, Trade Minister Chen Deming sought to tamp down the alarm by saying that exports will remain the same in 2011 as this year. But that served to confuse the situation as just three days earlier a ministry spokesman said the exports will be cut slightly in 2011. China meanwhile is also mulling tighter environmental rules governing rare earth mining.

Read on

The world versus China on rare earths. An unusually broad and multinational coalition of business associations wants the G-20 nations to help persuade China to reopen its exports of rare-earth elements. Some three dozen associations from the United States, Germany, Japan, South Korea, and elsewhere asked all G-20 members in a letter to "renounce interference with commercial sale of rare earth elements, domestically or internationally, to advance industrial policy or political objectives." The appeal follows a Chinese shipping embargo on rare-earth exports to Europe, Japan and the United States that began with a dispute over a fishing trawler in the East China Sea. The G-20 will start meeting next week in Seoul.

A Georgian vote for electric fleets. Shai Agassi got Israel to agree to be a guinea pig for his company Better Place, which aims to provide a network of battery-charging stations for electric cars. But now former Soviet Georgia wants to do him one better:  It says it will replace its entire government vehicle fleet with electric and hybrid cars over the next four years. The New York Times' Andrew Kramer figures  the plan will cost Georgia between $88 million and $166 million, depending on which commercial brands it buys. Georgia largely subsists on foreign aid, but the United States and Japan may welcome such ambition given current pessimism about electric-car sales.

It's official: Higher oil prices are coming. Over the last two years, petroleum behemoth Saudi Arabia has endorsed oil prices in the $70-per-barrel range, and that is largely where they have stayed. Now the influential kingdom is backing a price boost to $90 a barrel, and prices have recently moved in that direction, closing over $86 a barrel. Saudi oil minister Ali Naimi signaled the shift in a statement in Singapore. Meanwhile JPMorgan Chase and Bank of America Merrill Lynch are both forecasting a jump to over $100 a barrel next year, and the International Energy Agency says prices will be tempered in the coming decades only if governments enact climate-change rules that cause oil demand to drop.

The coming Caspian oil boom. The International Energy Agency is projecting that the Caspian states -- Azerbaijan, Kazakhstan, and Turkmenistan -- will produce 5.4 million barrels a day by 2025, double today's volume, and enough to satisfy 9 percent of total global demand at that time. The IEA also notes, however, that Russia continues to choke off the Caspian natural gas exports.

Shell in trouble for palm-greasing. Royal Dutch/Shell, Switzerland's Panalpina World Transport and five oil service companies  are paying $236 million in penalties to settle a bribery case with the U.S. government. The companies admit that they paid millions of dollars in bribes to officials in seven countries -- Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia, and Turkmenistan -- in order to facilitate customs shipments and to circumvent other rules.

Elon Musk's new friends. Panasonic is investing $30 million for a 2 percent share of Tesla Motors, the Silicon Valley electric-car startup run by Elon Musk. The Japanese electronics-maker joins Daimler and Toyota as big-ticket investors in Musk's company. Tesla already produces a $109,000 high-end car called the Roadster, and wants to build a mid-range vehicle called the Model S.

Six months after a U.S. fuel contract contributed to the ouster of Kyrgyz President Kurmanbek Bakiyev, we appear no closer to knowing whether his opponents are correct in assuming corruption and other criminality in the deal. At issue is a $3 billion U.S. military contract with two companies registered at mail drops and in offshore tax havens, and run by a cloak-and-dagger California native who makes Julian Assange look as open as Oprah, the Washington Post's Andy Higgins suggests in a weekend piece. The current Kyrgyz government says the contract enriched the Bakiyev family, and that the U.S. tolerated the situation to guarantee the longevity of Manas Air Base, which services the war in Afghanistan. Incidentally, Bakiyev alleged the same thing when he helped overthrow the Askar Akayev regime in 2005.

By approving such contracts, does the U.S. in effect cultivate the very corruption that it aggressively abhors in governments around the world? Scott Horton, a New York lawyer who sits on the board of American University in Bishkek, is among those who think so. At the Harriman Institute last Friday, Horton said:

The latest Transparency International corruption index is out, and it shows that countries occupied by the United States, in which U.S. contract awards have decisive importance to the economy, are two of the five most corrupt on earth. These nations have, moreover, become dramatically more corrupt since the U.S. took over. What is the relationship between having a large U.S. military installation and military contracting on your territory and corruption? The TI index points to a direct relationship. The U.S. talks a good tune about democracy, transparency and the rule of law. What it delivers is just the opposite.

(Full speech transcript here.)

Read on

The rare earths imbroglio continues. The New York Times' Keith Bradsher has another report on the slowdown of rare-earth exports from China: This time, he wrote, the flow of the strategic elements has slowed to not just the United States but also Europe. The Obama Administration ordered an investigation into the report. Two weeks before the U.S. mid-term elections -- in which the dastardly Chinese are already emerging as a popular bogeyman -- the elements are likely to come up as a political issue.

Sanctions tighten on Iran. The United States succeeded in further tightening oil sanctions on Iran this week, when Japan's Inpex said it would join European companies and halt its relationship with Tehran, which Washington is attempting to push to the negotiating table over its nuclear development program. (The Iranian government, meanwhile, played down Inpex's announced withdrawal from development of the Azadegan natural gas field.) That now leaves China as the last major country with significant energy investments in Iran, John Pomfret reported in The Washington Post.

Did Britain just institute a carbon tax? Earlier this year, Britain's Department of Energy and Climate Change launched a carbon emissions reduction policy that would have levied a pollution charge -- about $22 per ton of carbon -- on Britain's 4,000 biggest energy users, then paid the money back to the same companies in the form of energy efficiency incentives. It was a revenue-neutral approach -- until Wednesday, when the government quietly decided to keep the money, on the order of $1.58 billion a year. David Roberts at Grist explains.

China braces for a flood of LNG. If you want to gauge how much liquefied natural gas a country plans on using in the coming years, look to the shipyards. Case in point: The Chinese shipbuilding company that has built all of China's LNG tankers to date is ramping up its tanker construction efforts in preparation for what it anticipates will be a quadrupling of LNG imports between now and 2015, one of the company's top executives told Bloomberg News on Thursday. China's LNG consumption, if it lives up to the current projections, will have ramifications far beyond the country's shores -- just ask the companies building pipelines in Alaska.

Another $1.5 billion for biofuels in the United States. After the collapse of efforts to pass cap-and-trade legislation and hopes fading for even more modest renewable energy legislation, these are not the best of times for the clean energy industry in Washington -- unless, of course, you're in the biofuels business. Reuters reports that the U.S. Department of Agriculture is throwing another $1.5 billion at the industry in an effort to meet congressionally mandated targets for the production of still-commercially-unproven advanced biofuels by 2022. As for the 54-cents-a-gallon tariff on imported ethanol -- a reliable source of teeth-grinding for Brazil's government and sugar cane industry -- Agriculture Secretary Tom Vilsack says it's probably sticking around, though it's likely to be phased out in the future. File that in the "I'll believe it when I see it" folder.

Chevron drills deeper. Well, that didn't take long -- barely a week after the Obama administration lifted its moratorium on deepwater drilling in the Gulf of Mexico, Chevron announced Thursday that it would develop two fields in the Gulf estimated to contain some 500 million barrels of oil. The project is pegged at $7.5 billion, and would involve drilling wells deeper than BP's ill-fated Macondo operation. "In the end, the United States needs the oil and gas and other countries need the oil and gas, and some of the best places to explore are deepwater environments," Bobby Ryan, Chevron's vice president for global operations, told the New York Times' Clifford Krauss.

A few days ago, the United States responded to a United Steelworkers suit by announcing an investigation of China's alleged gargantuan subsidizing of its clean-energy industries -- something regarded by many countries, including China, as a strategic priority. Today we get China's apparent reply: Beijing is cutting off its exports of rare-earth minerals to the United States, according to the New York Times' Keith Bradsher.

The 17 rare-earth minerals are crucial to the manufacture of high-tech products such as advanced batteries and flat-screen televisions, and in military equipment such as missiles and jets. China mines about 95 percent of the world's rare earths.

The news comes the same day that China announced that it is further reducing the export of the minerals to all countries next year. In July, Beijing said it would reduce its rare earth exports by about 40 percent. Next year, it's set to reduce that volume by another 30 percent, according to another report by Bradsher.

The issue of rare earth availability has alarmed numerous companies and countries. Japan got cut off Sept. 21 after one of its naval cutters arrested a Chinese fisherman for ramming Japanese patrol boats. Since then, several companies have announced plans to accelerate the re-opening of rare earth mines in Australia, the United States, Mongolia, and Kazakhstan, but bringing such projects to fruition can take years.

This latest move significantly escalates a steady increase in economic and trade moves by both countries. If confirmed, the Obama administration might have no choice but to reply with some similar action, particularly given the poisonous mid-term election atmosphere in the United States.

Last week, two senior Uzbekistan officials were in Washington in an attempt to broaden relations currently focused on a single matter -- the Afghan war. As of now, Uzbekistan is seen as a friendly voice for U.S. officials fixated only on getting supplies to U.S. troops in Afghanistan over what they call the Northern Distribution Network. Not so much for those thinking about ordinary Uzbeks, whose living standards have steadily deteriorated under the tight economic and political grip of President Islam Karimov. Abdulaziz Kamilov and Sadiq Safayev, both of them senior Foreign Ministry officials, talked a lot about the always-fashionable notion of building a "Silk Road."

But one issue that dogged Kamilov and Safayev at the National Security Council and the State Department was the threatened imprisonment of Abdumalik Boboyev, a Voice of America correspondent, as Josh Kucera reports at Eurasianet. This blog wrote about Boboyev last week -- he was up against a possible eight years in prison for his allegedly slanderous VOA dispatches from Tashkent.

On Friday, Boboyev's verdict came down: an $11,000 fine, but no jail time. That's a gargantuan sum in a country in which the average salary is $291 a month (that's at the official exchange rate. It's $216 on the black market). His lawyers are considering whether to appeal.