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Can the US energy bounty defeat Russia’s energy weapon?

March 6, 2014

Russia’s energy weapon is the presumed ability of Russia to bully European governments into acquiescing to its policies by threatening to withhold natural gas deliveries, on which most of Europe is heavily dependent.  Some people argue that the ongoing American boom in natural gas production gives the US the ability to blunt Russia’s weapon by offering to ship natural gas to any and all European countries.  Seems simple and straightforward, but the reality is that it is not true.

As Michael Levi explains, there are several factors that limit the influence American gas can have in Europe.  First is the fact that natural gas production and sale is a private, commercial enterprise.  The US government has no gas to sale, and the European governments are not purchasers.  Second, there is a lack of infrastructure to support any large scale gas transfers to Europe.  Finally, the prices in the Asian market are much higher and that is the direction in which  US sellers have pointed their infrastructure.

Now, it is true that a change in government policies could change the situation.  For instance, the US could adopt a policy which loosens LNG export restrictions.  And the EU could subsidize North American gas purchases so that the European market is as financially attractive to sellers as the Asian market.   But Russia has never actually used their weapon against EU nations, so there is no will for the latter.  As long as the energy weapon remains nothing but an implied threat, it will not motivate European leaders to take extraordinary steps to diversify their supply.

In the end, the North American energy boom is a source of security for North America, but it cannot serve as an energy shield for anyone else.

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