Calls For Action on LNG Exports Grow Louder; Subcommittee To Examine H.R. 6 Tomorrow
In the wake of Russia’s aggressive actions toward Ukraine, calls for action on LNG exports continue to grow louder. The Washington Post editorial board asserts that increased natural gas exports would bolster the U.S. economy while weakening Putin’s influence over the global energy market. The Post’s editors write that the "obvious path forward" to leverage U.S. energy against Russia "is lifting irrational restrictions on exports and making it easier to build natural gas export terminals." The Energy and Commerce Committee is pursuing this path, and on Tuesday will begin its review of legislation to cut through the red tape and bureaucratic hurdles blocking exports of natural gas. DOE today approved its seventh export application, but at least 23 applications are still awaiting action and legislation is needed to accelerate approvals.
Introduced by Rep. Cory Gardner (R-CO), H.R. 6, the Domestic Prosperity and Global Freedom Act, will grant immediate approval of complete export applications currently filed with the Department of Energy and modify the process moving forward to ensure exports to our allies are not subject to unnecessary delays. The Subcommittee on Energy and Power will hear testimony from economic analysts, former member of Congress and Chairman of the Appellate Body of the World Trade Organization James Bacchus, and Hungarian Ambassador-at-Large for Energy Security Anita Orban. Click HERE to learn more about the hearing and read prepared testimony.
March 22, 2014
EDITORIAL: Using U.S. natural gas as an energy wedge against Russia
DEBATE HAS raged over whether the United States can fight Vladimir Putin on the Russian president’s most favorable ground: energy politics. It can, and it should, particularly because there’s an obvious path forward that coincides with the United States’ — indeed, the world’s — economic interests. That path is lifting irrational restrictions on exports and making it easier to build natural gas export terminals.
For years, Mr. Putin has used his nation’s wealth of oil and natural gas as a cudgel to bully his neighbors. At present, the European Union’s large imports of Russian natural gas discourage a forceful Western response to Russia’s aggressive actions in Ukraine. Meanwhile, the United States is tapping massive reserves of unconventional natural gas. That has not only made the U.S. self-sustaining in gas, but also driven down the price of U.S. gas to a point well below what Europeans are paying for the Russian stuff. If the federal government allowed more of it to be liquefied and exported, would the Russians lose a share of the European market?
The story is more complicated than that. Russian gas, which doesn’t need to be liquefied to move (by pipeline) into the European market, would enjoy significant price advantages over imported U.S. gas. The interaction of private buyers and sellers would probably direct U.S. exports to places where gas is more profitable to sell, such as Japan and Korea. The result would be a bounty for the U.S. economy and an improved American trade deficit — but not much direct displacement of Russian gas in Europe.
But that’s also not the end of the story. The U.S. entry into the Asian market would diminish Russia’s opportunity to profit there, as it aims to do. Contributing to an already widening and more diverse global supply of liquefied natural gas (LNG) would also give European importers more flexibility in sourcing their fuel — from the United States, Qatar, or others — the sort of market conditions that have already enabled Europeans to renegotiate gas contracts with Russia. The Council on Foreign Relations’ Michael Levi points out that Mr. Putin might end up with an uncomfortable choice between maintaining market share in Europe and slashing his prices more.
Ramping up U.S. exports would take years, but the effects would not only be long-term, as some critics charge. Action that communicates a certain intent to allow more LNG exports would send a signal that "the U.S. is open for business," as the Eurasia Group’s Leslie Palti-Guzman puts it. That could deter Mr. Putin from playing the energy card and help many buyers in negotiating long-term contracts.
The economic case for allowing natural gas exports is compelling on its own. Doing so would bring money into the country and uphold the vital principle that energy resources should flow freely around the globe, making the markets for the fuels the world economy needs as flexible and robust as possible. The more major suppliers there are following that principle, the less control predatory regimes such as Mr. Putin’s will have over the market.
Read the article online HERE.