That the United States is an energy superpower whose presence is being felt in the global marketplace has been on display this week during the president’s trip to Europe.
Because the U.S. is the world’s leading producer of natural gas and oil and the world’s leading refiner, we see America with growing opportunities to help friends and allies abroad through trade – even as domestically produced crude oil puts downward pressure on the global crude market, benefiting U.S. consumers with the lowest July gasoline prices in 12 years.
“America stands ready to help Poland and other European nations diversify their energy supplies so that you can never be held hostage to a single supplier or as we sometimes call it, a monopoly. I’m pleased to report that the first shipment of American liquefied natural gas arrived in Poland last month and there will be many more coming.”
It’s a watershed moment for U.S. energy – the point where a concept, that American energy could be a force for good around the world, is turning into reality. And, as additional U.S. LNG export infrastructure comes on line, America’s capacity to assist other nations can increase.
We know this is particularly welcome in Europe, where Poland and a number of other Central and Eastern European countries want to diversify their energy supply rather than continue being so heavily reliant on Russia for their energy supply. Last fall the U.S. ambassadors of Poland, Lithuania, the Czech Republic, Estonia, Hungary, Latvia, Slovakia wrote to congressional leaders:
We are convinced that the U.S. LNG exports to CEE would be a game changer for the region. It would send a strong geopolitical signal, enhancing competition on the regional market, while at the same time decreasing dependence on the dominant gas supplier and thus increasing the energy security of the CEE.
The game is indeed changing. At this week’s meeting of 12 Baltic, Adriatic and Black seas nations, President Trump said the U.S. would be a “faithful and dependable partner” in helping the countries achieve energy security. This, the United States is uniquely positioned to do – because America’s energy renaissance is producing natural gas and oil in volumes that allow the export of LNG, crude oil and refined products without sacrificing our domestic consumer benefits.
A key factor in sustaining and growing the United States’ position as an energy superpower is the continued ability of U.S. natural gas and oil companies to operate competitively the world over, to continue developing the energy needed here at home while also supporting energy exports to aid friends overseas. Legislation crafted by the U.S. Senate to increase sanctions on Russia could work against this.
Sanctions are important in the pursuit of U.S. foreign policy goals. But, as pointed out in this post, the Senate bill’s extension of the current ban on U.S. natural gas and oil companies’ involvement in oil projects located in Russia to projects worldwide involving Russian interests could effectively sanction U.S. firms. They could become less competitive globally because they could be barred from participating in oil projects that also involve Russian entities. Meanwhile, other non-U.S. companies could join energy projects from which U.S. companies are barred, potentially rendering the U.S. sanctions ineffective and leaving Russia unaffected.
It’s even possible that Russia could acquire small interests in oil projects around the world just to block U.S. companies from joining those projects. In an opinion piece for The Hill, the National Foreign Trade Council’s Richard Sawaya writes that the anti-competitive features of the Senate’s sanctions bill could have significant effects here at home:
The provision in question could exclude U.S. oil and gas firms from over $100 billion in investment opportunities over the next 10 years, costing Americans well-paying jobs and hurting the 401(k)s and investment portfolios of nearly every American … [and] would stimulate the Russian economy at the expense of our own.
The House of Representatives should make critical modifications to the Senate legislation to avoid the potential unintended consequences noted above, while also strengthening the bill to advance U.S. interests. U.S. Rep. Pete Sessions of Texas tells the Dallas Morning News:
“We need to not put the United States at a disadvantage. … It automatically gives the Russians not only a leg up, but denies the United States the ability to compete in the free market.”
Sessions is right. While recognizing that sanctions play an important role in the exercise of foreign policy, the Senate bill as written could damage U.S. energy companies, potentially setting off a range of negative impacts in the process. Time for the House to act.