Let's Frack Our Way to a Freer World
Don't forget that opening access to energy resources will reduce Russia's ability to pressure Eastern Europe
Beyond the cultural and border history between Ukraine and Russia, let's not forget the trade issues that actually brought about this current conflict. Certainly natural gas producers haven't, and they're using this conflict to encourage the United States to loosen up on our energy export laws so America can ship more overseas and take a bit of wind out of Vladimir Putin's sails without resorting to violence or military responses.
Bloomberg notes today:
Russia, the world's second-largest producer of natural gas after the U.S., has twice since 2006 cut supplies of the fuel to Ukraine, a conduit for energy to Europe. Greater access to U.S. supplies would blunt the ability of Russia to use energy as a weapon, according to supporters of lifting export curbs.
"This is a geopolitical fulcrum that we could be utilizing if we didn't have this protectionist constraint on U.S. energy," Christopher Guith, vice president for policy at the U.S. Chamber of Commerce's Institute for 21st Century Energy, said in a phone interview.
Russia is canceling the price discount on natural gas for Ukraine because of its debt owed to Russian gas giant OAO Gazprom (OGZD), President Vladimir Putin said today during a news conference. At the same time, the U.S. is preparing a financial-assistance package for Ukraine that would include $1 billion in loan guarantees to help the nation offset reduced energy subsidies, according to a White House statement today.
The United States is typically awful, bureaucratic, and slow about permitting fuel sales overseas to countries with whom we do not have free trade agreements. Bloomberg notes that the Department of Energy is weighing 24 applications to export liquefied natural gas. They've approved six applications since 2010. Unfortunately, though, the process is so involved that even if the Energy Department approved them all today, it would be years before our natural gas would be heading overseas.
Over at the Daily Beast, Christopher Dickey noted, while this conflict was starting to truly unspool last week, that Putin likes to use environmental arguments to make a big deal about the alleged horrors of fracking, as he and Russia benefit financially by keeping the rest of the world from accessing that shale gas:
Vladimir Putin just hates fracking—at least, he hates it when other countries do it. As the Russian president told an economic conference last year, in places where companies are fracking to extract natural gas, they turn on the faucet and "black stuff comes out of the tap." Consider the environment, he begged his audience.
While you're at it, consider the many European countries that depend on Russia for their natural gas or might compete with it as suppliers. Think of Bulgaria, Romania, Poland; and think, especially, of Ukraine. …
If the natural gas reserves in Ukraine are anything like as large as analysts believe—and that is a big "if," but far from an impossibility—then the geopolitical and economic position of the former Soviet republic could be transformed; its independence from Moscow assured; its value to the West unquestioned.
Even the ousted President Viktor Yanukovych understood that. (He was never so reliable a Putin ally as his opponents painted him.) Last November, Yanukovych's government signed a $10 billion deal for shale gas exploration and exploitation with the American-based multinational Chevron, following on another massive deal with Royal Dutch Shell. Together, Yanukovych claimed, those agreements would enable Ukraine "to have full sufficiency in gas by 2020 and, under an optimistic scenario, even enable us to export energy."
Read more, including how Bulgaria passed a sudden moratorium on drilling to be rewarded later with a 20 percent cut in the price of fuel from Russia, here.
