American Energy and the Biden-Putin Summit

Frank Macchiarola
Posted June 16, 2021

Here are three things to consider as President Biden and Russian President Vladimir Putin have their first in-person meeting today in Geneva, Switzerland:

Energy is at the heart of Russia’s influence and power

Experts believe the two leaders will discuss a number of issues during the summit, yet expectations are measured at a time when both have said relations between the two nations are at a post-Cold War low point.

Underlying the discussion is the fact natural gas exports and oil exports to Europe are at the heart of Russia’s economy and its ability to project influence and power – which Russia has done in the past.

There is certainly opportunity. In 2019, 41% of the European Union’s natural gas came from Russia, as well as 27% of its crude oil imports. Completion of the Nord Stream 2 natural gas pipeline, bringing gas from Russia to Germany, will add to Russia’s energy leverage.

U.S. energy production should serve to counter that influence. It has happened in the past. The advent of shale energy production from hydraulic fracturing made the U.S. the world’s leading natural gas and oil producer. And, as U.S. energy exports started flowing, American gas became a supply option for buyers in Europe and around the world. Certainly, few heads of state are as threatened by U.S. energy as Mr. Putin.

Recognizing the security implications of American energy, for the U.S. and its allies, is critically important for managing relations with Russia.

New U.S. policies put American energy leadership at risk

Unfortunately, at a time Russia is flexing its regional energy influence, the Biden administration’s early moves on domestic energy production and energy infrastructure, are undermining U.S. energy strength, leadership and global influence.

The Biden administration canceled the Keystone XL crude oil pipeline, which would have strengthened North American energy trade and security, and it failed to include pipelines in its infrastructure initiative.

Meanwhile, the Biden administration announced an indefinite pause to new federal oil and gas leasing – which, if it became permanent and halted federal development, could have profound negative impacts on U.S. domestic production, our economy, jobs and energy security. Recently, the administration announced it would hold up oil leases in Alaska’s Arctic National Wildlife Refuge at same time Russia and other world suppliers announced production increases.

Interestingly, U.S. imports of Russian crude oil and petroleum products are at their highest level since August 2010 as U.S. refiners work to make up for lost supplies from other countries.

The retreat on U.S. oil and natural gas production and energy infrastructure is the wrong signal to the world and, especially, Russia. The Wall Street Journal:

 

The U.S. is barreling toward one of the greatest self-inflicted wounds in its history. … Mr. Biden’s anti-carbon fusillade will have no effect on the climate as global demand for fossil fuels will continue to increase for decades no matter what the U.S. does. Meantime, Russia, China and Iran will take advantage of America’s astonishing fossil-fuel retreat. Unless there is some technology breakthrough, demand for fossil fuels will continue to grow for decades. And Russia and China will take advantage of U.S. energy disarmament. … Vladimir Putin is gloating that Russia’s Nord Stream 2 gas pipeline to Germany will soon be finished, as Mr. Biden has refused to sanction Russian companies running the project. But he didn’t care about upsetting Canada when he killed the Keystone XL pipeline. Nor Alaskans when he suspended the ANWR leases. Mr. Biden wants to curtail North American energy development while he stands by as Russia uses its natural resources for strategic gain.

U.S. oil and natural gas should be strengthened, not weakened

It is hard to imagine how the challenging relationship with Russia can be managed if the U.S. is simultaneously diminishing its own energy self-sufficiency and strength.

Domestic production is critically important for the U.S. economy, national security and Americans’ daily lives. U.S. and global demand for energy are projected to rise in the foreseeable future. More energy will be needed, not less. If not U.S. energy – the result of policies restricting oil and natural gas production and infrastructure – then whose energy will meet that demand?

There is no question the U.S. relationship with Russia is complicated and will be difficult for years to come. The last thing the U.S. needs is to try to deal with Russia while it is at the same time actively weakening its own energy position. It is an unforced error, an opening that cannot be handed over to formidable adversaries such as Mr. Putin.