Concerns About Russia Fuel New Calls For Gas Exports
AUDIE CORNISH, HOST:
Russia's leverage in Ukraine comes, in part, from its energy supplies. Ukraine is dependent on the country for the majority of its natural gas. But what if the U.S., with its new surge in natural gas supplies, was able to undercut that relationship? The U.S. traditionally hasn't been an exporter of natural gas but Republicans, like House Speaker John Boehner, say this diplomatic crisis is exactly why that should change.
REP. JOHN BOEHNER: Russia has the - has an energy stranglehold on much of Europe, and has been using it to its own advantage. And there is a growing consensus that ending this de facto export ban would not only keep Putin in check but help our economy as well, and help our allies in Europe. I think it's time to act, and I hope the president does.
CORNISH: To talk about the potential for the U.S. to use energy diplomacy, we have Jason Bordoff. He is director of the Center on Global Energy Policy at Columbia University and also, a former energy adviser to President Obama. Welcome to the program.
JASON BORDOFF: Thank you so much for having me, Audie.
CORNISH: Clearly, over the last few years, Russia has been wielding its energy resources in Ukraine, and other places, as a geopolitical tool. How has that worked for them?
BORDOFF: Well, Europe - and the Ukraine, in particular - are heavily dependent on Russia for energy supplies; natural gas, in particular, because unlike oil, which is a very fungible global commodity, natural gas, you're sort of dependent on just a couple of suppliers. In Ukraine's case, they are dependent on one supplier. So we've seen Russia in the past use that as a geopolitical weapon. They have physically cut off the supplies of natural gas to the Ukraine on several instances; most recently in 2009, over a pricing dispute. And when that happens, countries have very few other options.
So they're forced to accommodate or bend to Russia's demands, or pay higher prices. And we've seen, in this current crisis, Russia cut natural gas prices to try to get Ukraine to back away from an association agreement with the European Union. And now, they've announced again they're going to hike prices. Starting April 1st, Ukraine will be paying some of the highest prices in the world for natural gas, which could be quite crippling for their economy.
CORNISH: And for the U.S., what are the roots of this de facto ban Speaker Boehner is talking about? I understand that the U.S. is set to start exports of natural gas, but in 2015.
BORDOFF: Yeah, that's right. I'm puzzled to hear it called a de facto ban. You know, the U.S. just a few years ago - it's really remarkable how stunning and quickly the outlook for energy in the U.S. has changed. Just a few years ago, everybody projected the U.S. would become a very large importer of natural gas, and all of that would come in the form of costly liquefied natural gas. That has completely turned around.
Now, the U.S. will soon be an exporter of natural gas. There are about two dozen applications pending. You need the permission from the Department of Energy. They've already approved six of those permits. You know, the restriction on those projects is not that the government hasn't approved them. It's that these are multiyear, multibillion-dollar projects, and they just take a long time to put together.
CORNISH: This is also not taking into account the domestic politics, right? I mean, obviously, what has boosted these natural gas supplies is hydraulic fracturing, or fracking, and that's controversial with many environmentalists.
BORDOFF: It is. And it will remain contro - well, I think whether we export or not, we are going to significantly increase shale gas production and increase natural gas use in the U.S.; partly in response to low natural gas prices that make it more economic to use, partly in response to regulations that might curtail the use of coal for generating electricity. And we're going to, you know, there are real risks involved with shale gas development. We need to make sure the right regulations and enforcement are in place, to make sure it happens safely. And we're going to have to make sure we do that whether we export or not.
CORNISH: So if you had a magic wand and approved all those permits right now, would they really make a difference in a crisis like this one?
BORDOFF: They would make a difference in the next crisis like this one. So, again, it's going to take time for these projects to happen. The global market for natural gas today is fairly tight. You know, the supplies are limited. But when you look out over the next medium to longer term toward the end of the decade, we'll see a lot more diversity of supply, a lot more competition in the global natural gas market - not just because of the U.S. supplies but Australia, Canada, maybe the eastern African countries. And that would put a country like Russia in a different position, in terms of its ability to use gas as a weapon.
CORNISH: Because the U.S. would be able to...
BORDOFF: Because there would be more diversity, more sources of supply, more options. So if Russia were to try to, you know, hike prices or restrict supply, countries would have more options, in terms of other places they could go to get natural gas. And the U.S. would be one major contributor to that increase in global supply.
CORNISH: Jason Bordoff is director of the Center on Global Energy Policy at Columbia University. He's also a former energy adviser to President Obama. Thanks so much for speaking with us.
BORDOFF: Thanks for having me.
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