Russia’s considerable reserves of natural gas have given it considerable leverage over its Western neighbors, who rely on Gazprom for roughly 30 percent of their gas needs today. Moscow has been all too happy in the past to cut the gas off to get its way. That is the sword that hangs over the heads of Europe as they respond to the situation in Ukraine.The U.S. has, to this point, been slow to open up for overseas exports its suddenly considerable supply of natural gas (thank you, fracking!). We send some gas by pipeline to our North American partners but lack sufficient infrastructure to cool natural gas to liquid form (LNG) for transport by ship. Some two dozen such liquefaction plants are awaiting approval by the Obama Administration to begin construction, and many are using Ukraine as an argument for expediting the process and unleashing America’s glut of gas (which is roughly half the price of what Europe is paying and a third the cost of Asia’s supplies).Plenty of people outside the U.S. are hoping for this too. Ambassadors from the Czech Republic, Hungary, Poland, and Slovakia, countries which rely on Russian gas for 80, 50, 54, and 63 percent of their gas supplies, respectively, came together to ask Harry Reid and John Boehner to get the ball rolling on US LNG exports. The FT reports:
“The presence of US natural gas would be much welcome in central and eastern Europe, and congressional action to expedite LNG exports to America’s allies would come at a critically important time for the region,” they wrote in letters to Harry Reid, Senate majority leader, and John Boehner, speaker of the House. […]They went on: “Energy security is not only a day-to-day issue for millions of citizens in our region, but it is one of the most important security challenges that America’s allies face in central and eastern Europe today.” The letters were sent on Thursday and made public on Friday.
For a number of reasons, American LNG won’t be the kind of short-term fix many wish it to be. This isn’t a switch to be flicked on or off, and at the end of the day our gas is going to be sold to the highest bidder, not who we think needs it most.Having said that, a recently revised study confirmed that LNG exports will be a net positive for the American economy, despite the expected jump in domestic prices. Any policy that helps the American economy while simultaneously improving (however slightly) the energy security of our allies abroad should be a no-brainer.American LNG won’t save Europe, and it won’t have a significant impact any time soon, but it will be good for our economy, and it could eventually loosen Gazprom’s grip. Gas export boosters may be overstating their case, but that doesn’t mean they’re wrong.