World Economic ForumPutin poutin’.
The hallmark of a Republican policy proposal is that it can be adapted to virtually any circumstance. Just as George W. Bush advanced tax cuts as the appropriate response to both budget surplus and deficit, congressional Republicans believe that fossil fuel promotion is the appropriate response to, well, everything. And so they have looked at the vexing problem of Russia’s invasion of Ukraine’s Crimea region and come up with a carefully calibrated answer: “Drill, baby, drill!”
First, Sen. Lisa Murkowski (R-Alaska) was struck with a brilliant insight: If Russia’s meddling in Ukraine is dangerous because Russia supplies Europe with oil and natural gas through pipelines that traverse Ukraine, then the U.S. should offer Europe an alternative source of fossil fuels. And so, she argues, the Obama administration should expedite approval of liquefied natural gas (LNG) terminals. “Our ability to respond quickly and nimbly I think is somewhat hampered by the process that we have in place,” she told reporters at an energy industry conference in Houston on Monday. “If this was a situation in which we wanted to use as political leverage our natural gas opportunities here, we’re not in that place now, and quite honestly it may be some time.” In her speech to the gathering, she also called on Congress to repeal the ban on exporting crude oil, saying, “Lifting the oil export ban will send a powerful message that America has the resources and the resolve to be the preeminent power in the world.”
House Speaker John Boehner (R-Ohio), sensing an opportunity to portray generic Republican corporatism as a brave stand against Vladimir Putin’s bullying, issued his own statement Tuesday calling on Obama to approve LNG terminals. “The U.S. has a responsibility to stand up for freedom and democracy around the globe, and we have a responsibility to stand with the people of Ukraine in the face of Russia’s invasion,” said Boehner. “One immediate step the president can and should take is to dramatically expedite the approval of U.S. exports of natural gas. … We should not force our allies to remain dependent on Putin for their energy needs.”
Many energy experts would disagree with the premise of that last sentence. We are not forcing Europe to remain dependent on Putin if we don’t sell them natural gas. Europeans are free to simply consume less energy, or switch to cleaner sources. “The most effective way to loosen Russia’s grip on Europe’s energy supply is to help these nations dramatically reduce their demand for oil and natural gas via investments in fuel economy, alternative-fuel vehicles, energy efficiency, and renewable electricity,” says Daniel J. Weiss, director of climate strategy at the Center for American Progress.
The arguments advanced by Murkowski, Boehner, and even Sen. Mark Udall (D-Colo.) rest on two more false premises: that a disruption in Russian gas supplies to Europe represents a fearsome threat to the Continent, and that Russia’s behavior might therefore be altered by increased American gas exports.
After conflict between Russia and Ukraine led to supply disruptions in 2006 and 2009, Europe took measures to make itself less vulnerable. Meanwhile, as U.S. natural gas production has soared in recent years, U.S. demand for gas from the international market has shrunk, so even without exporting gas, we’ve been freeing up more of it for Europe. “The U.S. energy boom has already changed the balance of power in Europe away from Russia and to a more balanced posture, even without sending a single molecule of American natural gas over, because it has freed up supplies from places like Qatar and Norway to compete with Gazprom,” says Andrew Holland, senior fellow for energy and climate at the American Security Project, referring to Russia’s state-owned oil and gas company.
The Guardian explains:
[T]here are any number of reasons why Moscow’s natural gas supplies may not prove quite the potent economic and diplomatic weapon they once were. …
[S]ince the first “gas war” of 2006, many European countries have made huge efforts to increase their gas storage capacity and stocks are high. …
Other, structural changes have lessened the potential impact on Europe of a disruption to Russian gas supplies through Ukraine. New Gazprom pipelines via Belarus and the Baltic Sea to Germany (Nord Stream) have cut the proportion of Gazprom’s Europe-bound exports that transit via Ukraine to around half the total, meaning only about 15% of Europe’s gas now relies on Ukraine’s pipelines. Gazprom is also planning to start work in 2015 on a Black Sea pipeline (South Stream), meaning its exports to Europe will eventually bypass Ukraine completely. Ukraine itself has cut its domestic gas consumption by nearly 40% over the past few years, halving its imports from Russia in the process. …
Europe is increasingly installing specialist terminals that will allow gas to be imported from countries such as Qatar in the form of liquefied natural gas — while Norway’s Statoil sold more gas to European countries in 2012 than Gazprom did. “Since the Russian supply cuts of 2006 and 2009, the tables have totally turned,” Anders åslund, an energy advisor to both the Russian and Ukrainian governments, told the Washington Post.
It’s worth noting that the arguments for exporting crude oil and natural gas are not identical. Crude oil is easily transported and so the price is set by global supply and global demand. That means a supply disruption from Russia would subject Europe (and all the rest of us) to the same exact price shock whether they are buying their oil mainly from Russia, Norway, Saudi Arabia, or the U.S. So the idea that allowing U.S. crude oil exports would diminish Russia’s power to threaten economic sabotage is bogus.
Natural gas is a little more complicated because the process of refrigerating gas to liquefy and ship it is expensive, making gas delivered by a pipeline cheaper. It’s not clear if Europe would pay the price premium for American LNG. And if they did, the ultimate result would be the elimination of the price discount on American natural gas that American consumers currently enjoy. (It’s also worse for the environment to liquefy gas and ship it overseas because the process adds to the gas’s lifecycle emissions.)
And there’s yet another false premise behind Republicans’ calls for natural gas exports. It takes years to build an LNG facility, so expedited approvals now won’t have any impact whatsoever on the current crisis. The Obama administration has already approved one new LNG export terminal in Louisiana, but it won’t be done until at least 2015. And long term? As Constantine Samaras, an environmental engineering professor at Carnegie Mellon, puts it, “Would Russia behave differently if we were exporting natural gas to Europe? They already know the first U.S. LNG export facility is under construction, yet here we are anyway.” The Department of Energy said Wednesday it will continue reviewing LNG export terminal applications on a case-by-case basis.
All of this aside, there is still no evidence that Russia would be more respectful of Ukrainian sovereignty if it faced more competition for European gas markets. The main beneficiaries of allowing more exportation of fossil fuels would be the companies that produce those fossil fuels. That’s true of lifting the crude oil export ban, which pro-oil industry senators such as Murkowski were already pushing. And it’s true of natural gas exportation as well.
