Flood the market with oil and gas and Putin will wither
March 5, 2014 12:00 AM
Future historians may recall Barack Obama’s foreign policy as the Clash of the Cliches: Every time the president draws a red line, he winds up painting himself into the corner.
He did it with Syria, making bellicose threats he couldn’t back up, and now he’s done it with Ukraine. After Mr. Obama warned Russia to back off — “there will be consequences if people step over the line” — Vladimir Putin snorted in disdain and invaded the country anyway.
So what are the consequences? None in sight. Neither the United States nor anyone else is going to get into a war over who controls Crimea. And if Mr. Obama proposes economic sanctions, he’ll find himself pretty much going it alone.
Russia, as the world’s third-largest producer of both oil and natural gas, is just too important for most countries to play economic hardball with. The Western European nations who are most dismayed by Mr. Putin’s adventuring in Ukraine are also the least able to do anything about it: More than a third of their natural gas is supplied by Russia.
Fortunately, Mr. Obama has some options that won’t require him to ask Congress for a supplemental appropriation for red-paint thinner. Without risking a life or spending a penny, he can bring crushing pressure to bear on Mr. Putin. All he’s got to do is borrow a page from Ronald Reagan’s foreign-policy playbook.
Reagan’s military confrontations with Mr. Putin’s Soviet predecessors — the contras, the mujahedeen, Star Wars — are well known. But his most effective policy is less remembered: Reagan relentlessly jawboned Saudi Arabia to boost its oil production.
That increased supply and decreased prices, ripping the heart out of Moscow’s oil-export business and sending its already shaky economy into a tailspin. Less than a decade later, the Soviet Union collapsed.
Mr. Obama can do the same thing to Mr. Putin, without even asking for help from Saudi Arabia. All he has to do is stop interfering with U.S. production of natural gas through fracking and stop blocking construction of the Keystone XL oil pipeline.
Fracking — short for hydraulic fracturing, a process that frees natural gas by injecting pressurized liquids into the ground — has been around since the 1940s. But new technologies introduced over the past 15 years have made it cheaper and more effective. The result is a production boom that has cut natural-gas prices by as much as 75 percent.
The boom has already taken a huge bite out of the profits from Russia’s natural-gas exports. And it could do more if Mr. Obama would tell the Department of Interior to quit monkeying around with regulations on fracking for the one-third of America’s natural-gas wells located on federal land.
The Keystone XL pipeline could move 830,000 of barrels of crude oil a day from Canada to Texas refineries, from where it would head outward onto world markets, offering another (and more politically stable) source of petroleum. When oil supplies go up, prices go down and the Russians take a hit.
But Mr. Obama has been dragging his feet for years on approval of the pipeline, even after the latest of the hoops he set for approval — a State Department report on the pipeline’s environmental impact — gave it a clean bill of health.
This is pointless pandering to the Democratic Party’s Luddite left, which opposes anything more mechanized than sunshine. The Canadians are not going to leave the oil in the ground to gratify American hippies; they’ll just build a pipeline to their own west coast — or, maybe, ship the oil via rail, a far more risky proposition. But that will take years. Why not leverage the pipeline’s foreign-policy value now?
Russian oil and gas exports have been Mr. Putin’s salvation. When he came to power, the energy market was hot, with skyrocketing Chinese demand and a supply constricted by Hurricane Katrina, the second Gulf War and Hugo Chávez’s economic nuttiness in Venezuela.
Oil and gas grew to be 70 percent of Russia’s exports and fueled 7 percent annual economic growth. The burgeoning Russian middle class, in return, was willing to overlook Mr. Putin’s antidemocratic quirks. If the good times end, so will public support for him. Ronald Reagan would have figured that out.
Will Barack Obama?
Glenn Garvin is a columnist for the Miami Herald (email@example.com).