The U.S. does not use energy as a bargaining tool to get what it wants from other countries. Nor could it even if it wanted to; it has been decades since the U.S. produced enough excess oil and gas to be a net exporter on the international stage.
But many of the major oil- and gas-producing countries do. While the U.S. ranks third and rising among the top 10 energy-producing countries, at least three of them — Russia, Iran and China, plus Venezuela (13th) — are totalitarian regimes.
These countries are not our friends, and they all use energy policy as a tool to buy regime support and funnel cash to nefarious efforts, including terrorism, political suppression and international unrest.
Russia has some of the largest proven oil and gas reserves, at least using traditional extraction methods, and has resorted to “energy diplomacy” for decades.
The country provides about a third of the European Union’s natural gas needs and is entering the Asian markets. For decades Russia provided energy at significantly below-market prices to financial basket cases like Cuba and the Soviet Bloc countries of Eastern Europe, which helped to keep those surrogates dependent while hiding the failure of their socialist economies.
But for at least a decade Russia has been charging above-market prices, and even disrupted supplies in the dead of winter, to nearby countries that haven’t had many options. That pricing strategy helped fill Russian coffers to engage in international mischief, making Russian President Vladimir Putin more popular at home than he might have been.
Iran also has used energy as a bludgeon, even threatening to stop oil shipments through the Strait of Hormuz if Israel or the U.S. ever raises a hand against it.
And the late Venezuelan strongman President Hugo Chavez used his oil money to prop up Cuba and to funnel cash to other socialist regimes and terrorists.
Many energy-dependent countries would like to be free of that oil and gas stranglehold to pursue their on foreign policy interests and alignments. The good news is that the old paradigm is shifting; the better news is that we can accelerate those changes.
For one thing, the oil and gas production boom, especially in the U.S., has dramatically increased energy supplies and pushed down prices. That means that some of the “energy captives” now have options available to them, including coal, they may not have had in the past, helping to break the stranglehold.
Indeed, some EU countries have pushed back against Gazprom, which handles virtually all of Russia’s natural gas exports, and demanded significant price cuts — and got them.
But this shift is not necessarily permanent; much of it depends on expanded U.S. production, made possible by hydraulic fracturing, or “fracking,” and the ability to export some of that energy.
Which takes us to the better news: how to accelerate the current trend. The U.S. must move forward with plans that will turn cheap and abundant natural gas into liquefied natural gas (LNG) for export. We are only now building the liquefaction facilities to undertake this venture on a large scale, and the private sector is investing the money to make it happen — as long as the Obama administration will allow it.
The ability for the U.S. to extract and export energy is a national security issue. Energy self-sufficiency, which could be attainable in a decade or so, would mean that U.S. foreign policy wasn’t held hostage to energy policy.
And ensuring that energy-dependent countries have other options would reduce the potential for energy diplomacy, help dry up the coffers of countries that would harm the U.S. and its allies, and dramatically increase U.S. manufacturing and exports (refining is part of the manufacturing sector).
If Russia, Iran, China and Venezuela have no energy monopoly over their neighbors, they would have very little control — and even less money. Producing and exporting U.S. energy may be the closest thing we’ve seen to a real “peace movement.”
Merrill Matthews is a resident scholar at the Institute for Policy Innovation.