What’s
Wrong Today:
As
John Kerry ends his
meeting today with Russia’s Foreign Minister Lavrov with no progress, it is
time to review a thread that has emerged from the last 10 days of posturing in
the US about Russia’s energy threat to West.
The US
Department of Energy (DoE) said that it would sell
5 million barrels of crude oil from the Strategic Petroleum Reserve; a move it
said was to test the capabilities of the nation’s emergency stockpile in a
rapidly changing oil market, (meaning Ukraine and Russia’s threat to cut flows
of gas to Europe).
It would
be the first sale from the reserve since 1990.
Oil
Price.com reports that after Russia’s occupation of Crimea, many in the
West wondered if it were possible to unleash
America’s natural gas abundance to reduce Europe’s dependence on Russia
for over 30% of its natural gas supply. Moscow has used this leverage in the
past to extract political concessions, and Gazprom, Russia’s gas
behemoth, has threatened to cut
exports to Ukraine should it fail to pay its gas debt.
To many,
the answer to the specter of Russian natural gas dominance is clear: unleash
America’s natural gas.
This
sentiment was crystallized in a John Boehner Op-Ed in the Wall Street Journal last week, which
called on President Obama and the DoE to accelerate approvals for
new LNG export terminals and to open up America’s natural gas supplies to
export. Boehner claimed that not only can the United States match Russia in the
European energy marketplace; it has an
obligation to do so.
The DoE has
approved
six applications for terminals
to export liquefied gas; five are in Texas and Louisiana, and one in Maryland.
A further 24 applications are pending.
Boehner
and other top Republicans are calling on the administration to expedite their
approval. Hard talk from the Boehner:
the tables and put the Russian leader in check lies right beneath our feet, in
the form of vast supplies of natural energy
From last
Friday’s Guardian:
by gas producers such as ExxonMobil, have for years been pushing to
dramatically increase gas production to enable export trade, and are using the
crisis in Crimea to argue for swift action by the Obama administration
No
surprise that the oil industry and Republicans smell opportunity. But, would
American natural gas exports help shift the European balance of power?
In
short: no. From Oil Price:
gas that could potentially head for Europe is already committed in long-term
supply contracts. The reasons for this are financial. Building an LNG export
facility is a multi-billion dollar endeavor, and financiers want to be sure
that future revenue is guaranteed, at least until the debts are paid off…This
means that even once American LNG exports are booming, little of that gas could
be rerouted in a surge to offset Russian supply.
Mr. Boehner
ignores two important facts: First, most of those contracts are in Asia, where
natural gas prices are higher than in Europe. Second, the US does not sell
natural gas, corporations do. Why would these
companies voluntarily lose money in order to advance American interests? They
wouldn’t.
Those
businesses are most likely to sell the gas where they will get the greatest
return. Landed (includes costs of delivery by tanker) LNG prices in Europe
range between $10 and $11 per MMBtu (one million BTUs), while the price in
Asia is $15 or higher.
Mr.
Boehner should have also considered that the gas liquefaction process adds
between $4 and $6 to the price of natural gas, and that the benchmark price for
American natural gas spiked to over $7 per MMBtu in the beginning of March due
to our abnormally cold winter.
At these
prices, it would be hard for American producers to compete with European prices
even if they wanted to.
Mr. Boehner’s call (and that of other Republicans) for “helping” Ukraine and Western
Europe offers nothing to solve the current problems with Russia.
Boehner
might have been on solid ground if the argument was to export crude
oil or possibly, coal
to Europe. That might work quickly to dampen Moscow’s regional clout, but natural
gas exports cannot tip the geopolitical energy scales anytime soon. It might
happen in 5-10 years.
It
is amazing to see the extent to which the foreign policy of our nation can be
subverted to serve corporate interests. Why are we yammering on and on about
Ukraine? Have we done anything about China interfering in Tibet? Or about China
and its clash with Japan over the Diaoyu (or Senkaku, depending on your side in
the dispute) islands?
We
are hip deep in Ukraine because of the neoconservatives who have
specialized in modern imperialism for profit. The class that now manages Washington
have been unceasing in their efforts to achieve their geopolitical goals. Those
include Russia’s encirclement, and direct military intervention, as we have
done in Grenada, Panama, Serbia, Iraq, Afghanistan and Libya.
For
those readers who think this little rant is over the top, here are 3 words to
consider: “Operation Iraqi Freedom”.
That’s
what in Orwellian doublethink, America’s government called 12 years of interference
in Iraqi to keep a supply of oil from falling into, or staying in, the wrong
hands. Interference, with thousands killed on our side and millions displaced
on the side of the Iraqis.
Never understood how Serbia was our problem. And decades later, we see that little has been resolved (not excusing the ethnic cleansing, but there was some of that on all sides). So now we see an angry John McCain and a slightly less angry Lindsey Graham (whining little mother fucker) complaining about the loss of US power.
The US lost power as soon as we demonstrated (via our Iraq misadventure) just how little is really accomplished via arms and armor. We have essentially schooled the world in just how to conduct an insurgency.
“We have essentially schooled the world in just how to conduct an insurgency.”
AMEN Brother!