Published on September 18th, 2018 | by Tina Casey0
Russia Wins 2016 Election, Loses Energy Race
September 18th, 2018 by Tina Casey
Russia’s interest in US presidential politics looked like a win for the sprawling former Communist state, when Donald J. Trump took occupancy of the Oval Office in 2016. However, it’s beginning to look like a case of being careful what you wish for. Last week, the US Department of Energy announced that the US is leading the rest of globe in oil production and ramping up its natural gas exports — at the expense of Russia, of course.
DOE hammered the point home on September 13, when it issued a self-congratulatory press release on the very same day that Energy Secretary Rick Perry was in Russia, meeting with Russia’s Deputy Prime Minister and Minister of Finance, Anton Siluanov, and with Energy Minister Alexander Novak, too.
Economic Sanctions Lurking Behind Energy Race
It’s an open question whether or not President* Trump realizes that a win for the US in terms of sheer oil and gas production volume is a loss in stature for one of his most favorite heads of state (that would be Russian prime minister Vladimir Putin, for those of you keeping score at home).
What the President may likely realize is that Russia would prefer to be liberated from the economic sanctions it has been suffering under since 2014. The sanctions, backed by the US and EU among others, went into effect after Russia illegally annexed Crimea.
Despite Trump’s apparent efforts to derail the sanctions, so far Congress is holding firm. In a rare bipartisan show of agreement, that goes for Trump’s Republican allies as well as Democrats.
The US Vs. Russia Natural Gas Smackdown
Front and center in the line of fire is Russia’s Gazprom. As the world’s largest natural gas producer, Gazprom provides almost one-third of the gas imported by Europe.
In short, those sanctions give other natural gas stakeholders — including those based in the US — a chance to bump Gazprom out of the European market.
In advance of last week’s US – Russia energy meetings, our friends over at Forbes explained how Gazprom’s Nord Stream II pipeline project factors in:
Washington doesn’t just want to punish Nord Stream II because of Russia’s behavior in Ukraine…Everyone in the global natural gas business knows that the U.S. wants to roadblock Nord Stream II in order to entice Europe, a huge gas market, to import more costly American liquefied natural gas.
So go ahead, slap a fine on Nord Stream II already!
Wait, that’s not as simple as it sounds. Nord Stream II is billed as a European-Russian collaboration. The project is being financed through European countries, aka the traditional allies of the US. Here’s Forbes again:
…if the U.S. Treasury does go ahead with threats to fine Gazprom’s pipeline partners, they will be targeting major corporations from the U.K., Germany, France and Austria. Germany is particularly interested in Nord Stream II, which is a sister pipeline to the existent Nord Stream I. Both lines run under the Baltic Sea and connect northern Russia to Germany.
Hmmm…well, so far Trump doesn’t seem to mind irritating his country’s traditional allies in Europe for the sake of scoring points with Russia, so there’s that.
Oh…whatever. So complicated! The basic idea is that natural gas from the US could ease Europe out of its dependency on Russian imports. Nevertheless, knocking Nord Stream II out of the running is a tall order.
Last year the energy research firm Wood Mackenzie assessed the situation and decided that the economic drivers for Nord Stream II were strong enough to push the project over the policy obstacles and toward completion in 2020.
CleanTechnica will check in with Wood Mackenzie (formerly GTM Research) to see if they’ve updated their analysis, so stay tuned for more on that.
What About Those US – Russia Energy Meetings?
So, with all this in mind, Secretary Perry goes to Russia with an important announcement in his pocket, in the form of a press release dated September 13 with the headline “U.S. Becomes World’s Largest Crude Oil Producer and Department of Energy Authorizes Short Term Natural Gas Exports.”
The release leads off with this observation:
The Energy Information Administration (EIA) estimated in their latest Short-Term Energy Outlook that the United States is now the largest global crude oil producer, likely surpassing Russia and Saudi Arabia…In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.
September 13 was the date of the Novak meeting. Here’s how things went down according to the Department of Energy:
…Secretary Perry made clear that while the United States welcomes competition with Russia in energy markets across Europe, Asia and elsewhere, Moscow can no longer use energy as an economic weapon. The United States is now in a position to offer these nations an alternative source of supply.
Okay, so what about the Siluanov meeting? This one also took place on the 13th:
…Secretary Perry reiterated the Administration’s firm opposition to the Nord Stream 2 pipeline because the project would concentrate a single route of Russian gas into Europe, one vulnerable to disruption and risks of over reliance for European consumers…
Apparently the Russian government extended an olive branch, but the Energy Department wasn’t having it:
Both Deputy Prime Minister Siluanov and Minister Novak, in their earlier meeting, expressed Russia’s desire to restart the dormant U.S.-Russia Energy Working Group. Secretary Perry believes that while this would be a positive step forward, the future of our relationship with Russia is predicated on successfully addressing our broader disagreements.
To be clear, Russian media most likely had a different take on the two meetings.
Nevertheless, the outcome seems to be that nothing much has changed since the US and Russia sat down to talk about sanctions and energy issues last June.
Last summer Congress began making some serious moves on new sanctions legislation, so we’ll see where that goes.
The Cost Of Winning The Fossil Fuel Race
Is this beginning to sound like the arms race that culminated during the Reagan administration? Kind of! Former President Reagan took a lot of credit – deserved or not (many think not, btw) – for busting up the former Union of Soviet Socialist Republics by ramping up military spending to a crippling degree.
US citizens paid a price for Reagan’s focus on Russia, in terms of skyrocketing deficits and lost opportunities for social investment. Among other public health failure, the Reagan administration’s failure to respond to the AIDS crisis also comes to mind.
Similarly, communities throughout the US are dealing with the local externalities of the ramp-up in oil and gas activity, including public health impacts, water resource issues, air pollution, and even earthquakes.
Then there’s that thing about global methane emissions and climate change, but who’s counting?
Speaking of fossil fuel risks and hazards, here’s an interesting coincidence for you. The September 13 DOE press release included this takeaway from the Novak meeting:
Secretary Perry also expressed his disappointment and concern about Russia’s continued attempts to infiltrate the American electric grid.
On that very day, the US did suffer a major grid disaster — but it was a local gas grid, not an electric grid.
The September 13 disaster occurred in Massachusetts when scores of homes literally blew up, apparently due to excess pressure in local gas lines.
Don’t get too excited about Russia infiltrating US utilities and messing with the gas lines. Who needs Russia when lax safety regulation is at play! The parent company of the local utility has been linked to a number of other isolated gas-related incidents stretching back at least six years.
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Image (screenshot): via US DOE.