Can the United States Rule the (Energy) World?
Geopolitical crises in Eastern Europe have been met with calls in the United States to use energy as a foreign policy tool. With U.S. Energy Secretary Ernest Moniz asking the industry to make a stronger case, it’s domestic policies that may inhibit energy hegemony.
“The industry could do a lot better job talking about the drivers for, and what the implications would be, of exports,” Moniz told an audience at the IHS CERAWeek energy conference in Houston.
The Energy Information Administration said in its weekly report that gross exports of petroleum products from the Unites States reached 4.3 million barrels per day in December, the first time such exports topped the 4 million bpd mark in a single month.
The agency said the United States is a net exporter of most petroleum products, but crude oil exports are restricted by legislation enacted in response to the Arab oil embargo in the 1970s.
In January, Kyle Isakower, vice president of economic policy at the American Petroleum Institute, said reversing the ban would help stimulate the U.S. economy and lead to an increase in domestic oil production by as much as 500,000 bpd. Current export polices, he said, are “obsolete.”
This week in Houston, Sen. Lisa Murkowski, R-Alaska, a ranking member of the Senate Energy Committee, said oil could help reposition the United States as the premier superpower.
“Lifting the oil export ban will send a powerful message that America has the resources and the resolve to be the preeminent power in the world,” she said.
President Barack Obama can show “true American grit” if he acts quickly and according to precedent. If the ban is reversed, it will be for the benefit of the international community, she said.
Moniz, who said in December that the export ban deserves some “examination,” said he wasn’t yet convinced the case had been made to open the U.S. spigot, however.
For natural gas, House Energy and Commerce Committee Chair Fred Upton, R-Mich., said expanding U.S. liquefied natural gas exports could be used to contain Russia, which dominates much of the Eastern European gas market.
Russia caused a stir with its military response to the situation in Ukraine, and Upton said Monday that foot-dragging at the Energy Department on LNG exports was putting U.S. allies in Eastern Europe “at the mercy of Vladimir Putin.”
The U.S. federal government needs to determine that LNG exports to countries without a free-trade agreement are in the public’s interest. The United States doesn’t have a free trade agreement with any European country, and the current transatlantic agreement up for debate has been stymied by European Union concerns over the National Security Administration’s cyber-espionage campaign.
A January report from the Center for a New American Security said the economic connection that would come from oil exports could manifest itself as “coercive political influence” in foreign affairs. Domestic policy, however, needs to be honed first before the U.S. tries once again to tip the balance of power overseas.
Originally written for OilPrice.com, a website that focuses on news and analysis on topics of alternative energy, geopolitics, and oil and gas. OilPrice.com is written for an educated audience that includes investors, fund managers, resource bankers, traders, and energy market professionals around the world.