Captain America's Neglected Shield
How US energy policy could have further deterred Russian invasion
They say that hindsight is 20/20, but hindsight’s really more like 2017.
That was when shrewd observers knew beyond a shadow of a doubt that the US had everything to gain from drastically ramping up its export of natural gas.
The reasons were clear:
More profits for American companies and investors
More employment opportunities for American workers
Stronger economic ties with Europe and potentially even China
The possibility of lowering greenhouse gas emissions worldwide by transitioning more countries off of coal and onto the green(er) gateway fuel that is natural gas
One more reason might have been added to the pile this spring.
Now with hindsight it has become an especially painful reason.
Had the United States sooner begun providing European countries (& China) with an affordable and abundant alternative to Russian petroleum and coal, it might just have weakened Putin’s position enough to deter his invasion of Ukraine.
Is this just speculation rooted in a counterfactual hypothetical scenario?
Maybe.
But with Russia’s economy crumbling under a mountain of sanctions, their continued sale of energy to the EU and elsewhere has perhaps been a lone pillar of stability amidst the turmoil.
And US and EU leadership seem to be in clear agreement on this point.
That’s why:
President Biden and European Commission President Ursula von der Leyen announced late last month that, “the US will ship 15 billion cubic meters of liquefied natural gas (LNG) to EU markets this year.” (New York Post)
Now you might say this is a bold response to the invasion and doubtless a wise strategic move in the medium to long term.
There’s just one problem: the US is currently nowhere near capable of exporting enough natural gas to wean Europe off of Russian energy.
And Putin knows it. He accounted for it.
That’s why Moscow has been able to threaten cutting off energy flows to force the EU into paying for Russian gas in rubles. (US News)
And it’s also why EU officials are now asking, “people to use less air conditioning, drive slower, and work from home to help reduce reliance on Russian energy.” (Business Insider)
Maybe it’s naïve to think increased American natural gas exports could have entirely prevented Russia’s invasion of Ukraine.
But given that the US now plans to ship 15 billion cubic meters of LNG to the EU in total this year, and that the canceled Atlantic Coast Pipeline alone would have transported more than 15 billion cubic feet of natural gas per day to the US’ east coast for shipment to Europe, it doesn’t appear it would have hurt! (Construction Drive)
A steady supply of natural gas from a friendly United States would have most definitely been appreciated by our European allies.
It may even have been a shield against the looming Russian bear.
And, though you will never hear environmentalists admit it….it would have been a shield that would have also transitioned more of Europe off of coal to help reduce greenhouse gas emissions and combat climate change.
Hopefully more pragmatic energy policymaking is to follow.
Keep your eyes peeled and read plenty of sober investment commentary!
To your wealth!
Roger S. Conrad