HOW THE AMERICAN ENERGY ECONOMY COULD STOP PRESIDENT PUTIN

Foreign policy challenges defined by conflict are rarely easy to resolve. But while using force is sometimes the only option to bring about lasting peace, creative diplomacy often offers great potential.

Consider Vladimir Putin’s expansionist foreign policy. Today, the Russian president has raised his flag over Ukraine’s Crimean peninsula and carved out a fiefdom in South Eastern Ukraine. Defying U.S. peacemaking efforts, Putin is reinforcing his tyrant buddy, Syrian President Bashar al-Assad. He is building an alliance with the Chinese imperium of Xi Jinping. In doing so, Putin is shredding the principles of democratic sovereignty (Ukraine), basic morality (Syria), and the American architecture of international stability (China).

Unfortunately, so far, Putin is showing no signs of backing down even in the face of international condemnation and sanctions. In fact, he’s escalating. Fortunately, the United States has a powerful diplomatic tool that we could bring to the table. And were we to do so, we would weaken President Putin’s potential for aggression.

The tool?

Energy. Specifically, American energy export potential.

At present, the global oil market is heavily supplied and prices are low. Americans are enjoying low prices at the pump and businesses are benefiting from lower costs. But there’s a catch. The continuing ban on U.S. oil exports, introduced by Congress in 1975, means that American energy firms are missing out on a lucrative global market. And whatever the ban’s former merits — if there ever were any — it makes very little sense in 2015.

The tool to weaken Putin’s aggression? American energy exports
Were American oil to enter the global market, that new demand potential would generate jobs and investment here at home. Moreover, U.S. oil exports would also lower global oil prices even further, causing trouble for Putin. After all, Russia’s energy sales account for 70 percent of its total export revenue. As the BBC notes, Russia ‘‘loses about $2 billion in revenues for every dollar fall in the oil price.’’ On September 4, the Interpreter noted a Russian business news outlet’s reporting that ‘‘revenue from Russia’s export of oil has dropped 42% to $56.23 billion during the first seven months of 2015.’’ Now struggling in a recession — Russia’s economy has contracted by around 5 percent from last year — Putin’s government must borrow extensively to keep operating. U.S. oil exports would force him to borrow even more.

But America’s diplomatic energy-export opportunities don’t end with oil. Liquid Natural Gas exports (LNG) offer another opportunity to weaken Putin’s stranglehold over Europe. While the competitive logistical base for U.S. LNG exports to Europe must improve — we lack adequate export infrastructure and transportation costs across the Atlantic are high — with time, a vibrant U.S. LNG export market would at least offset price gouging of the kind that President Putin uses to blackmail eastern European submission during cold winters.

Even then, U.S. policymakers have another golden tool at their disposal — the fracking revolution. Thanks to the fracking industry’s ever-improving productivity and ingenuity, it’s now actively competing with the conventional global oil market. As such, by competitively pressuring inefficient Russian energy producers, fracking firms can force Putin to get used to painfully low energy export prices.

Of course, economic logic alone isn’t enough to make this diplomatic gambit happen. Facing socialist zealots like Bernie Sanders, special interest warriors like Tom Steyer and regulatory fetishists in the U.S. government, President Obama is reluctant to cut regulatory obstacles to the energy revolution at his feet. But there is hope. With momentum growing in Congress behind bills such as HR 702, which would loosen oil export restrictions, conservatives should use this moment to re-double our efforts to unleash America’s energy markets. The prize is real.

Trusting in American competitive potential, we’ll have a good chance at restraining Putin’s aggression without ever firing a shot.

Tom Rogan is a contributor for Opportunity Lives and writes for National Review. He is a panelist on The McLaughlin Group and a fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets.