Fraser Nelson: America Has A New Weapon To Use – The E-Bomb
The US’s energy power, a product of the shale revolution, is what the Kremlin fears most – in future Vladimir Putin will have to be more careful
For decades it has seemed as if God has played a great joke on mankind, granting the best fuel reserves to the worst places. Iran, Russia, Saudi Arabia, Turkmenistan – all have been able to run fairly repressive regimes, feeling no need to become open, competitive democracies. As Vladimir Putin has found, if you own the gas which the rich world needs, then you can get away with murder.
Consider yesterday’s European Union summit. Leaders agreed, in effect, to be jolly annoyed about Putin’s annexation of Crimea. They may even cut up some oligarchs’ Harrods storecards. But to go much further? Difficult, when Russia is supplying a third of Europe’s gas. As Finland’s Europe minister candidly put it: “There isn’t that much that we could do, at the end of the day. And I think the Russians know that.”
Europe is a recession-struck continent dependent on a Kremlin-controlled energy price. Putin cleverly cut Gazprom tariffs to the region last year, ramping up its dependence on Russian gas to record levels. And in so doing, he effectively bought EU foreign policy.
He’d find it harder to buy America’s nowadays. As Barack Obama considers his options, he has a substantial new weapon that he is not sure how to deploy. In the last few years, the shale revolution has utterly transformed America’s energy fortunes. When Putin invaded Georgia, it seemed as if the US was running out of natural gas – and George W Bush meekly wondered whether to buy some from Russia. Since then, the shale bonanza has sent American crude output soaring by 60 per cent, taking the country into a thoroughly unexpected era of energy abundance. Its gas prices have fallen by two thirds; factories and jobs are flooding back to former rust belt states. By the end of this decade, America will be exporting more energy than it imports.
This is redrawing the global energy map, and the implications go way beyond the economic. If America doesn’t need Arabian oil, why should it spend billions having the US Fifth Fleet keep the peace in the Persian Gulf? Why spill so much blood and treasure in overseas entanglements where no national interest can be found? Why not let Europe sort out its own back yard – and let this debt-addled continent confront the consequences of its failure to pay for a proper military?
But events in the Crimea have now added another question: why shouldn’t America use its new-found energy reserves as a weapon? It would be easy enough to do. If Barack Obama were to export more of this gas, he could send world prices to the floor – hurting not just the Kremlin, but the oligarchs who support Putin. Of all the weapons in America’s arsenal, its new energy power is perhaps what the Kremlin fears most.