Fuel for U.S. Foreign Policy

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Russian President Vladimir Putin after a meeting with Iraqi Prime Minister Nouri al-Maliki in the Novo-Ogaryovo residence outside Moscow, October 10, 2012.

By Chris Faulkner – Vladmir Putin’s aggressive foreign policy has left Ukrainian democracy running on fumes. But American energy has the potential to shift the balance of power away from Russia, reinforcing both political and economic stability in Europe.

America’s energy resources are already abundant, and U.S. policy needs to embrace this major advantage. Expediting approval for Keystone XL and the export of liquefied natural gas would help stabilize the energy equation in Europe, throwing Putin off balance.


Right now, Russia is the third-largest oil producer and the biggest exporter of natural gas on the globe, a distinction it wields to its advantage as the regional bully.

Europe’s energy situation is already — and increasingly — precarious. As the Congressional Research Service has noted, “Europe’s natural gas consumption is projected to grow while its own domestic natural gas production continues to decline.”

Thus far, that has meant heavy reliance on Russian energy, particularly in Eastern Europe; in Ukraine, 70 percent of all gas used originates in Russia, while Bulgaria has an even less diverse energy market. Across Europe, 34 percent of natural-gas exports came from Russia in 2012.

Three times recently — in 2009, 2008 and 2006 — Russia has restricted the energy supply that runs through Ukrainian pipelines, which move more than 70 billion cubic meters of gas every year. Already, between 60 and 80 percent of Russian gas bound for the European Union gets there through Ukraine, so it’s easy to see how, by kinking the hose, Putin could easily interrupt the supply of energy throughout much of the continent.

Russia is attempting to repeat history: In the first week of March, Gazprom, a Kremlin-run corporation, vowed to quit providing discounted gas to Ukraine, further using Russia’s energy heft to manipulate the region. But the global energy market has dramatically changed since Putin’s earlier rounds of shenanigans, a development that threatens his ability to make trouble.

The United States recently surpassed Russia as the world’s top natural-gas producer, a direct result of hydraulic fracturing or “fracking.” Moreover, ExxonMobil has estimated that internationally, natural gas will become the second most common energy source by 2025. And by some credible estimates, America’s shale boom could hit Russian oil exports particularly painfully, causing them to plummet by 25 percent after 2015.

To make the most of this new foreign-policy advantage, the United States needs to get serious about liquefied natural gas (LNG) exports — and to do so loudly enough to rattle the Kremlin walls.

A good start would be to approve the Keystone pipeline, which would pump 830,000 barrels of crude oil every day from the Canadian tar sands en route to Gulf Coast refineries. Not only would this reduce U.S. dependence on foreign oil, but it would free up more North American energy for potential export. It would also send a strong message that the United States is earnest about making the most of its resources, to global affect.

While critics claim Keystone’s approval could hurt the environment, the evidence is lacking. Five consecutive times, the U.S. State Department has concluded after arduous study that Keystone XL would not significantly impact the environment or worsen carbon emissions.

Beyond approving Keystone XL, the United States could also cut through red tape to allow American companies to more quickly begin exporting natural gas. Though the Energy Department has begun to issue permits, American businesses won’t be able to send gas overseas until at least 2015.

Exercising American soft power through energy would not only be effective; it would likely be popular, too. While 68 percent of Americans reported that Russia’s actions in Ukraine were unjustified, 56 percent are reluctant to get too involved. Opening American energy to Ukraine and to Europe as a whole will gently remove some of Russia’s leverage without unduly entangling the United States in a foreign dispute.

Casting open the global energy gates could also threaten Russia’s tyrannical and violent elite, who rely heavily on oil and gas money. American competition could undermine the country’s energy stronghold, which would inevitably have political repercussions, given that oil and gas taxes account for at least half of all revenue for Russia’s government.

Right now, Russian gas is sold domestically at a discount, but if the international markets are less reliant, Putin may have to raise prices at home, undermining political stability.

Energy has given the United States a unique opportunity to undercut Russia’s economic and political hold on Europe. Smart policy could usher in a new era of American energy diplomacy, if only our President and lawmakers have the will to act wisely.

Chris Faulkner is chief executive officer of Breitling Energy Corporation.