Breaking Russia's energy stranglehold
By Paul Driessen
European Union nations want to impose tougher economic sanctions on Russia for invading Ukraine and providing the missiles that shot down Malaysia Airlines Flight MH17. However, they are worried about biting the hand that feeds them – with the natural gas that fuels much of its economy.
Russia is the world's second-biggest natural gas producer and third-biggest oil producer, so it can inflict tremendous pressure and damage on its neighbors without firing a shot. The 28 EU nations as a whole depend on Russia for one-third of their oil and gas. However, Estonia, Finland, Latvia and Lithuania get 100% of their natural gas from Russian President Vladimir Putin. Six other European countries get more than half of their gas from the powerful Russian Bear: Czech Republic (57%), Poland (59%), Ukraine (60%), Hungary (80%), Slovakia (84%) and Bulgaria (89%).
That makes the Europeans highly vulnerable to cuts in the fuel supplies they need to power their cars, keep their businesses, factories and economies running smoothly – and heat homes, to literally keep people alive during brutal winters like those they've experienced recently. A simple "nyet" from Mr. Putin could reduce or cut off energy exports, leaving the continent hostage to Russia and creating a potential disaster. European officials know this but so far are frozen by their own fears and policies.
Sen. John McCain (R-AZ) calls Russia "a gas station masquerading as a country," because 60% of its exports are oil and natural gas. Cutting these exports to pressure Europe politically might hurt Russia's economy. However, it has already done so, is currently squeezing Ukraine over winter gas supplies – supposedly over late payments for past deliveries – and is making export arrangements with China and other countries, to reduce any economic harm it might suffer from engaging in renewed energy blackmail.
Moreover, during one week this September, Russia supplied up to 45% less gas than Poland requested, the Poles' largest oil and gas company reported. Over the past decade, "Russia has halted the flow of gas through Ukraine three times, directly affecting eastern and southern European countries most reliant on Gazprom, the giant Russian energy monopoly," the Christian Science Monitor has observed.
Indeed, 16% of Russian natural gas exports flow through Ukraine. In yet another pressure tactic, Russia began tightening the export spigot in June. Russian gas supplies through Ukraine to Slovakia have been cut by 25%, says Ukrainian Energy Minister Yuriy Prodan.
There's no question that the EU and USA must punish Russia for seizing Crimea, infiltrating troops and military equipment into eastern Ukraine to support secessionists, aiding terrorism, and killing hundreds of innocent jetliner passengers. Since no one wants a shooting war with Russia, economic sanctions are all that's left. Failure to do even that would give Putin a green light to move more forcefully against Ukraine – or even try to occupy other former Soviet Union nations.
Putin has called the breakup of the Soviet Union "the greatest tragedy of the 20th century." Before invading Ukraine, Russia invaded the former Soviet territory of Georgia in 2008 to support separatists who had declared independence for the Georgian provinces of South Ossetia and Abkhazia. It's not at all hard to imagine Putin moving against Lithuania, Latvia, Estonia, other former Soviet possessions or even Finland, to bring them into Mother Russia's suffocating embrace. But how can the EU end the blackmail, enjoy some foreign policy independence and improve its faltering economy with less reliance on Russia?
If European countries faced food shortages due to import restrictions, they would offer their farmers incentives to grow more. EU members need to act the same way on the energy front. Otherwise, they give Russia tremendous sway over their future. European nations certainly have the ability to take action.
For one thing, they could import more natural gas from the United States and other countries besides Russia, until it can produce more domestic energy. Europe is blessed with enormous quantities of oil and natural gas – including enough gas to supply all its needs for at least 28 years, during which it could develop viable alternatives to gas and the dozens of coal-fired generators it is now building. US Energy Information Administration data reveal that Sweden has enough gas to meet its needs for 250 years. Denmark, Poland, Bulgaria, France and Spain also have extensive potential, as do Great Britain and other countries. Unfortunately, those deposits aren't economically recoverable using traditional drilling.
However, they can be captured using hydraulic fracturing (fracking) – which has been used safely and with great economic and employment benefit more than a million times in the United States since 1947. It has made the United States the world's largest natural gas producer.
Not surprisingly, environmental extremists strenuously oppose fracking – further crippling Europe's ability to meet its energy needs and chart its economic destiny and foreign policy. Also not surprising, Russia is secretly funding the European anti-fracking movement "to maintain European dependence on imported Russian gas," NATO Secretary General Anders Fogh Rasmussen recently revealed.
But if there's a silver lining to unfolding Middle East events and Russia's naked aggression, it's that more sensible Europeans are finally looking more critically at their self-destructive energy and environmental policies. The European Union announced in September that it will combine previously separate energy and climate ministries into one office. The decision infuriates radical greens, but it reflects growing business, worker, consumer and family concerns about reliable, affordable electricity and motor fuels.
Next, Europe needs to allow fracking. Right now, virtually every EU nation except Poland and Britain bans fracking. Besides making Europe more energy independent, fracking would reduce carbon dioxide emissions by enabling European nations to rely more on natural gas and less on coal. Fracking would also reduce EU natural gas, electricity and even oil prices, as it has in the USA. It would also create or save millions of jobs that are endangered (or gone) because of Europe's outrageously high energy costs. In fact, many EU companies and families pay three to eight times more than Americans do for electricity.
Another problem in Europe is that people living above the shale deposits have no ownership or economic interests in developing them. They are inconvenienced, but the state and drilling companies get all the money. The EU needs to devise incentives that give landowners and residents a positive stake in development – such as a royalty or percentage of every Euro of oil and gas produced and sold.
On this side of the pond, US petroleum production must be further increased. The huge gains in American oil and gas output since 2009 were all on private and state lands, while the Obama administration has presided over a nearly 40% decline in production from onshore and offshore federal lands. The President and congressional Democrats need to stop being energy obstructionists, and let American companies tap these energy treasure troves. That would create jobs, generate billions in government revenues, make more gas available for European purchase, and strengthen our economy and balance of trade. Congress should also consider prohibiting state and local fracking bans as unconstitutional constraints on trade.
Congress and the President should also fast-track US natural gas exports to Europe, by speeding permits for liquefied natural gas (LNG) facilities. These actions would encourage further drilling, technology improvements and job creation. As Europeans adapt and improve America's rapidly advancing fracking technologies and develop their own gas, these exports will be less vital. But they are essential now.
The world is not going find safe, efficient, affordable, environment-friendly alternatives to oil, natural gas and coal in the next decade or so. (Right now, Europe gets just 1.3% of its energy from wind and solar, but 75% from fossil fuels – and both wind and solar exact significant environmental costs.) In the meantime, we need to rely more on realistic opportunities and initiatives, and on our oil supplier friends in Canada and Mexico. If we don't, we'll have to continue importing from increasingly unstable and unfriendly parts of the world – and being constantly at their tender mercies, just like the Europeans.
Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and Congress of Racial Equality, and author or Eco-Imperialism: Green power - Black death.