The People of America's Oil and Natural Gas Indusry

The World Power of American Energy

Mark Green

Mark Green
Posted July 30, 2014

The quest to encourage better behavior from Russia continues. President Obama and the European Union this week announced new sanctions to protest Russia’s involvement in Ukraine, measures that focus on Russia’s energy, arms and finance sectors. The president:

“Today … the United States is imposing new sanctions in key sectors of the Russian economy:  energy, arms, and finance.  We’re blocking the exports of specific goods and technologies to the Russian energy sector.  We’re expanding our sanctions to more Russian banks and defense companies.  And we’re formally suspending credit that encourages exports to Russia and financing for economic development projects in Russia. At the same time, the European Union is joining us in imposing major sanctions on Russia – its most significant and wide-ranging sanctions to date.”

Meanwhile, former Secretary of State Hillary Clinton says Europe needs to stand up to Russia, which will be easier to do if Europe diversifies its energy supplies:

“They need to understand they must stand up to [Russian President] Vladimir Putin. The reluctance has to do with European dependence on energy from Russia.”

Laudable sentiments and goals, but America can do more than impose targeted and inherently limited sanctions. The U.S. can do more than talk. America can do more to provide effective help for her friends and to diminish the influence of adversaries. Through energy, American energy.

With bolder vision and leadership the United States can increase domestic oil and natural gas development while pulling down self-imposed barriers to energy exports. The U.S. can help its allies, diversify the supply of global energy markets and reduce Russia’s energy-based power. API President and CEO Jack Gerard, interviewed recently by Bloomberg TV:

“Too often when we talk about sanctions we think of it in a negative context about punitive measures to punish others. We think there’s another dynamic here that should be part of the dialogue, and that is what the Europeans have been asking us to do. And that is to look at our domestic production, both of natural gas and crude oil, and to begin plans to export that to wean the European economy off Russian energy. We shouldn’t forget that about 50 percent of the Russian budget is derived from sales of oil and natural gas. If we begin to push into that marketplace, if we commit to our European allies that we can supply much of that energy need, they’re going to be more courageous in their ability to push back on Russians. Why? Because they’re not … dependent or beholden to them for energy.”

The United States is the world’s leading producer of natural gas and is expected to pass Russia and Saudi Arabia as the No. 1 producer of crude oil next year, according to the International Energy Agency. We have vast reserves of energy from shale and other tight-rock formations that are being safely and responsibly developed with advanced hydraulic fracturing and horizontal drilling. With increased access to oil and natural gas reserves onshore and offshore, we can continue reducing crude imports while supplying friendly buyers overseas.

Unfortunately, administration policies are hindering both. Oil and natural gas production on federal lands declined from 2009 to 2013, according to the Congressional Research Service. Of the off shore acreage under federal control, 87 percent remains off limits to safe energy development. As for exports, the administration continues to slow-walk approval of projects to build liquefied natural gas (LNG) export facilities, more than 20 of which remain on hold because of dithering in Washington.

These are obstacles to America acting like an energy superpower – exerting positive leverage on the world energy stage. This game-changing influence is not some far-off goal. Merely removing the impediments to U.S. energy reaching world markets would clearly demonstrate America’s intent to be engaged, providing benefit right away. Gerard to Bloomberg TV:

“Most importantly, it’s the signal that it sends today. Many of the punitive sanctions being talked about today have very short-term impact. What we need to think about is the longer-term, geo-political implications of what we’re doing. The United States has the ability to become the energy superpower in the world, and we need to align that energy policy with our geo-politics such that we bring those allies close, we reassure them that they’ve got energy in the future, and that will change that dynamic. … Unfortunately, we need strong leadership at this time, and we really haven’t had it. And that’s why I think it’s important that we put more options on the table. … We have leverage like we’ve never had before.”

The past century and a half of global history is dotted with occasions when the world looked to America to act – both of the world wars, numerous natural disasters and other examples. This is a similar time. Europe watches as Russia flexes its muscle in Ukraine, because it is beholden to Russian energy. Some are begging for the U.S. to act, so that American energy can be the answer. It can be, if we act now to harness it.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.