TIME

America Can’t Fix Europe’s Russian Energy Problem

Gasoline pump at gas station
Kyoungil Jeon—Getty Images

With the tumult in the Ukraine continuing, there’s been a lot of talk over the last week about how the U.S. may have a major lever in the fight against Putin’s Russia—petro-politics. Usually, it’s emerging markets like Russia that use oil and gas as a political tool. And indeed, the fact that countries like Germany get about a third of their energy from Russia is a key reason that Europe hasn’t been as willing to go along with trade sanctions in the past. Sure, the Russians need Europe as much as Europe needs them (if not more)—about 70 percent of Russia’s export revenues come from oil and gas, much of it sold to the Continent. But no European leader wants to risk an energy shortfall or peak prices in the middle of winter.

The question is whether the U.S., which is becoming a major shale oil and gas producer in its own right, can actually do anything to help Europe loosen the Russian energy noose. The Obama administration believes it can, and is pushing to accelerate the process of getting American liquid natural gas (LNG) online and ready for export. A front-page story in the New York Times hinted that American energy could make a big difference in Europe, and in the conflict with Russia.

I think that view is overly optimistic. Here are three reasons why:

  1. LNG is, and remains, a very localized market. The first LNG export port to clear the Federal Energy Regulatory Commission (FERC) hurdle is Cheniere Energy’s Sabine Pass port, on the Sabine Pass River on the border between Texas and Louisiana. But it won’t come online until late 2015 at the very earliest—possibly even 2016. The next three ports on the wait list haven’t even been green lighted.
  2. The U.S. isn’t producing a lot of shale oil and gas yet, anyway. While the U.S. energy department is predicting that shale oil production will climb to about 10 million barrels per day by 2017, right now, it’s about 3 million bpd. Given that America itself consumes over 90 million bpd of fossil fuel, it’s not as if we are about to become a major energy exporter, even as our own production rises.
  3. We need cheap energy at home if we are going to fuel the manufacturing renaissance. We’ve heard a lot about the growth of manufacturing in America over the last few years. But a big part of that story is easier access to cheap shale oil and gas here at home. American business wants to build pipelines to take Western shale oil and gas to Rust Belt factories to improve competitiveness. If we start to see much of it going to Europe, we may have a political and/or trade fight on our hands.

The bottom line: American can’t save Europe when it comes to energy. The Continent needs to wean itself off Russian gas, no question. But it’s more likely to do that by rethinking its recent reductions in nuclear energy and overly generous subsidies for green energy (which have pushed up prices), as well as by looking abroad to places like West Africa for new energy sources than by counting on the US for a quick energy fix. While America’s push to speed up the LNG approval process may send a useful political message to Putin, it won’t change the European energy dynamic on the ground anytime soon.

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