American Energy Leadership: Stability, Security, Positive Influence
Posted February 17, 2022
The Russia-Ukraine standoff and its potential to gravely impact Europe’s economic and energy security have spotlighted a point we’ve made for some time now – that the world is a better, safer place when America is leading the way on energy.
Conversely, when American energy isn’t leading, the U.S. and its allies may face severe challenges when you consider the essentiality of energy to economic growth, national security and environmental progress.
This has been underscored as Europe faced a mid-winter cutoff of some or all of the natural gas it gets from by Russia – in the event Moscow decided to use energy as a weapon in the Ukraine crisis. This is in Russia’s recent history.
As things simmered in Europe, American liquefied natural gas (LNG) cargoes streamed across the Atlantic. For example, the U.S. Energy Department reports the U.S. exported 60.3 billion cubic feet of LNG to the United Kingdom in December, roughly double the amount shipped in November. According to IHS Markit, LNG exports to Europe in January supplied higher volumes (34% of Europe’s total supply) than Russian pipelined natural gas, which decreased from 30% to 40% of Europe’s supply to just 17%. The largest share of those LNG exports came from the United States, the report said.
Dustin Meyer, API vice president for Natural Gas Markets, said last month that American energy was stepping up:
“During this acute period of demand squeeze, the U.S. is not only exporting at record levels but has actually ramped up additional LNG capacity – responding to meet our allies’ demand when they need it the most.”
This is significant – for Europe’s safety and global stability – and makes the case for policies that support and strengthen American energy leadership. In a letter to the editor of the Wall Street Journal, API Senior Vice President Frank Macchiarola wrote that American energy can play a critical role with backing by the right policies in Washington:
The U.S. could do even more if the Biden administration did more to encourage LNG infrastructure and allow the free flow of LNG markets. The administration should make clear that America is positioned to provide stability amid any disruption – and can do so without increasing costs at home.
While LNG exports are a small portion of domestic natural-gas production, they are about 20% of the global LNG market. Further, the U.S. is set to have the world’s largest LNG export capacity by the end of this year. These exports create jobs and growth at home and provide allies a stable energy source in an unstable world.
America is well-positioned, as Macchiarola said, to do more with exported LNG. The U.S. Energy Information Administration reported in January that American LNG export capacity would be the world’s largest by the end of the year. An analysis by IHS Markit went further, finding that the U.S. would be the world’s export volume leader this year, overtaking Australia and Qatar.
The U.S. has natural gas in abundance, with only about 13% exported as LNG last month. American exports can increase without having a significant effect on prices here at home. The U.S. Energy Department has examined LNG exports four times over the past several years, concluding that rising exports will have negligible impact on domestic prices. Here’s a graphic from LNG Allies showing rising U.S. LNG exports and falling prices at Henry Hub, the key U.S. pricing benchmark.
As Macchiarola wrote to the Journal, the U.S. could do more if the Biden administration is more supportive of LNG infrastructure and trade. The administration should communicate, without equivocation, that it understands the value of U.S. LNG in providing stability and security in response to potential disruptions, both now and in the future – a prime projection of American energy leadership.
Specifically, the Energy Department should move faster in approving LNG exports to non-Free Trade Agreement nations. (Essentially, authorizations to FTA nations are granted immediately). For exports to non-FTA countries, DOE must first determine that it’s in the public interest and, unfortunately, this has not been as swift as it could be under the Biden administration. DOE also could approve applications to increase export volumes from existing U.S. facilities.
America has the natural gas – and oil – to project positive energy leadership across the globe. Needed are policies to sustain and grow this leadership, which will provide new American influence and greater energy flexibility, writes Daniel Yergin in the Wall Street Journal. Yergin:
Today there is no doubting the geopolitical importance of America’s new oil-and-gas position. The Ukraine crisis and Europe’s energy crisis shine a light on the global impact of U.S. oil-and-gas production.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.