September 14, 2013
WELL, PUTIN WILL APPRECIATE THAT: Obama’s FERC nominee, Ron Binz, wants to kill natural gas.
First, we need to sober up and recognize the source of Putin’s power: petro-dollars. Half of Russia’s state budget comes from foreign oil and gas revenue. So if we want leverage over Putin and his cronies, we need to break his petro piggybank.
While surging U.S. natural gas production already is applying pressure on the Russians, more can be done. Exporting U.S. liquefied natural gas (LNG) and spreading the shale revolution abroad offer opportunities for undercutting Putin’s power.
The early shale boom stunned global energy markets and caught Russia flatfooted. Its state-owned gas company, Gazprom, was forced to renegotiate supply contracts with European customers and book billion-dollar losses.
Russia’s gas exports ran up against an unlikely competitor: cheap U.S. coal, which flooded the European electricity market as U.S. electric utilities switched from coal to low-cost and abundant natural gas.
However, Gazprom has since recovered, and its profits are climbing again. Exports of Russian gas to Europe are at a three-year high. Since more than half of Gazprom’s revenue comes from such exports, Putin’s coffers are flush again, and he’s flexing his muscles.
Exporting more of our natural gas and technological expertise would be effective ways of hitting Putin where it hurts. With major shale formations scattered across Eastern Europe, the potential is there to pull Gazprom’s largest export market out from under Putin’s nose.
Yep. But Obama doesn’t seem interested in standing up to Putin.