Clearly, Putin is relishing the abdication of American power, especially in Syria and other parts of the Middle East. He must also feel pleased that the $25 million Russia has paid to U.S. lobbying and public relations firms over the past few years to burnish his image is finally paying off.
So is there anything America and Obama can do to knock Mr. Putin off his perch? Some have advocated boycotting Russian products, such as Stolichnaya vodka. The problem is that “Stoli,” the most popular Russian vodka, isn’t even bottled in Russia but rather in neighboring, pro-western Latvia. And sales of Russian caviar in the U.S. have been declining for years.
But there’s another way America can take Putin down a peg or two: Start exporting some of our abundant oil and gas.
At present, Russia is the world’s number two producer of oil and natural gas, supplying most of the hydrocarbons to Western and Eastern Europe as well as China. But in 2011, the U.S. surpassed Russia to become the planet’s number one producer of natural gas. Within a few years, mainly because of the shale boom, America should once again be the world’s biggest oil producing nation.
But, unlike Russia, America is exporting very little of its rapidly expanding supplies of oil and natural gas. Oil exports have been essentially banned since the OPEC embargo of 1973-74, and exports of gas are constrained by a lack of liquefaction and transportation facilities. The good news on the gas front is that four LNG (liquefied natural gas) export terminals have now received permits from the U.S. Department of Energy, and more than 20 other permit applications are pending.
The global market has a voracious appetite for natural gas, particularly for use in electric power generation. With gas prices currently averaging $10 in Europe and $15 in Asia, U.S. gas at $3.70 is a bargain. Even if Henry Hub prices should rise to $6 or $7 over the next decade, American gas will remain competitive in the export market, even adding in the liquefaction and transportation costs.
Importantly, by exporting liquefied natural gas (LNG) from the U.S. to Europe and Asia we can help break Gazprom’s hold on those markets. At the same time, we should continue transferring our fracking technology to China, Poland and other countries with substantial shale resources to diminish their dependence on Russian gas.
Getting into the oil export business is another way to hit back at Russia while at the same time boosting America’s energy sector. However exporting U.S. oil will be a tougher political sell since we’re still a net importer, though most comes from friendly countries like Canada and Mexico while OPEC now accounts for less than 10 percent of U.S. consumption.
Of course, all of this will require President Obama to stop his war on fossil fuels. That means expediting the permitting of natural gas export terminals, repealing the prohibition on oil exports, opening more public lands and the outer continental shelf to oil and gas drilling, keeping the Environmental Protection Agency out of fracking regulation, and backing off his perennial call for higher taxes on the oil and gas industry.
Weinstein is associate director of the Maguire Energy Institute in the Cox School of Business at Southern Methodist University and a fellow with the George W. Bush Institute.