Let’s Frack Our Way to a Freer World

Beyond the cultural and border
history between Ukraine and Russia, let’s not forget the
trade issues that actually brought about this current conflict.
Certainly natural gas producers haven’t, and they’re using this
conflict to encourage the United States to loosen up on our energy
export laws so America can ship more overseas and take a bit of
wind out of Vladimir Putin’s sails without resorting to violence or
military responses.

Bloomberg notes
today:

Russia, the world’s second-largest producer of natural gas after
the U.S., has twice since 2006 cut supplies of the fuel to Ukraine,
a conduit for energy to Europe. Greater access to U.S. supplies
would blunt the ability of Russia to use energy as a weapon,
according to supporters of lifting export curbs.

“This is a geopolitical fulcrum that we could be utilizing if we
didn’t have this protectionist constraint on U.S. energy,”
Christopher Guith, vice president for policy at the U.S. Chamber of
Commerce’s Institute for 21st Century Energy, said in a phone
interview.

Russia is canceling the price discount on natural gas for
Ukraine because of its debt owed to Russian gas giant OAO Gazprom
(OGZD), President Vladimir Putin said today during a news
conference. At the same time, the U.S. is preparing a
financial-assistance package for Ukraine that would include $1
billion in loan guarantees to help the nation offset reduced energy
subsidies, according to a White House statement today.

The United States is typically awful, bureaucratic, and slow
about permitting fuel sales overseas to countries with whom we do
not have free trade agreements. Bloomberg notes that the Department
of Energy is weighing 24 applications to export liquefied natural
gas. They’ve approved six applications since 2010. Unfortunately,
though, the process is so involved that even if the Energy
Department approved them all today, it would be years before our
natural gas would be heading overseas.

Over at the Daily Beast, Christopher Dickey
noted, while this conflict was starting to truly unspool last
week, that Putin likes to use environmental arguments to make a big
deal about the alleged horrors of fracking, as he and Russia
benefit financially by keeping the rest of the world from accessing
that shale gas:

Vladimir Putin just hates fracking—at least, he hates it when
other countries do it. As the Russian president told an economic
conference last year, in places where companies are fracking to
extract natural gas, they turn on the faucet and “black stuff comes
out of the tap.” Consider the environment, he begged his
audience.

 While you’re at it, consider the many European countries
that depend on Russia for their natural gas or might compete with
it as suppliers. Think of Bulgaria, Romania, Poland; and think,
especially, of Ukraine. …

If the natural gas reserves in Ukraine are anything like as
large as analysts believe—and that is a big “if,” but far from an
impossibility—then the geopolitical and economic position of the
former Soviet republic could be transformed; its independence from
Moscow assured; its value to the West unquestioned.

Even the ousted President Viktor Yanukovych understood that. (He
was never so reliable a Putin ally as his opponents painted him.)
Last November, Yanukovych’s government signed a $10 billion deal
for shale gas exploration and exploitation with the American-based
multinational Chevron, following on another massive deal with Royal
Dutch Shell.  Together, Yanukovych claimed, those agreements
would enable Ukraine “to have full sufficiency in gas by 2020 and,
under an optimistic scenario, even enable us to export energy.”

Read more, including how Bulgaria passed a sudden moratorium on
drilling to be rewarded later with a 20 percent cut in the price of
fuel from Russia,
here.