Blank: Energy diplomacy can check Russian aggression

Stephen Blank

In the effort to induce Russia to reverse its aggression against Ukraine, America’s most formidable asset is its energy.

For years, Putin has used his nation’s oil and gas resources as a club to bully his adversaries. America’s European allies have often been wary of pushing back against the Kremlin’s incursions in the Ukraine and elsewhere out of fear Moscow would choke off the energy spigot.

But now a slump in global oil prices has brought Russia’s economy to the brink of collapse. The ruble is having its worst year since 1998. The country’s inflation rate is rising along with unemployment.

In all, the drop in oil prices has cost Russia as much as $100 billion this year. These ill effects have been exacerbated by U.S.-E.U. sanctions, which make it particularly difficult for Russian firms to access credit.

Oil and gas constitute 68 percent of Russia’s total exports and half its federal budget. By quickly expanding America’s energy exports, federal officials can deliver another blow to Russian aggression and firmly tilt the balance of power away from the Kremlin.

Expanding American energy exports would also undermine Moscow’s “energy pivot” to Asia, where it hopes to make up for its decreasing influence in Europe.

A key factor driving lower global oil prices is the American energy boom. New technologies like fracking have expanded domestic oil production to more than 9 million barrels a day. This abundance has made the U.S. the world’s biggest energy producer, ahead of Russia and Saudi Arabia.

Less than a decade ago, the United States was importing 60 percent of its crude oil. Now, the U.S. Energy Information Agency expects crude oil production to outstrip domestic demand within two years.

If U.S. producers were allowed to export excess energy to foreign markets, they’d undercut Russia’s key source of leverage and strengthen America’s ties to her allies. Most American oil would probably go to Asia. That would free up Middle Eastern producers to send more to Europe, offsetting the continent’s dependence on Russian energy and deepening the economic impact of sanctions.

However, U.S. law currently prohibits energy companies from exporting crude oil. This ban is a relic of the 1975 domestic energy crisis caused by the Arab oil embargo.

Obviously, much has changed since 1975. American consumers no longer fear a severe disruption of their energy from nefarious foreign actors. And U.S. law already allows domestic producers to export natural gas and refined oil products, such as gasoline and diesel fuel.

With the United States well on its way to becoming a net energy exporter, the logic behind the crude export ban is clearly outdated.

The diplomatic leverage from crude oil exports could be deployed almost immediately. Unlike natural gas, which requires extensive infrastructure to transport, crude oil can quickly be pumped onto tankers and shipped anywhere in the world.

American oil exports would render Russia less able to strong-arm its neighbors by cutting off their energy supplies or charging extortionate prices.

Fortunately, political support for lifting the ban is rapidly mounting. Rep. Joe Barton, a top House Republican, recently introduced legislation to remove restrictions on crude exports.

For Russia, energy resources have long been a source of strength. But falling oil prices — precipitated by the U.S. energy boom — have eroded that advantage. If lawmakers step up and lift the crude oil export ban, then America’s energy resources would become a major diplomatic asset in the fight against Russian aggression.

Stephen Blank is a senior fellow at the American Foreign Policy Council.