No Gas for You!

by John Fund

Vice President Joe Biden is in Kiev today meeting with Ukrainian leaders. One of the gifts he is bringing is a package of technical assistance on how to boost production in Ukrainian natural-gas fields and develop what one U.S. official accompanying Biden called “unconventional” gas resources. In the U.S., we call that “fracking,” the procedure by which fluid is injected into cracks in rocks to force them open, allowing oil and gas to flow out. 

The irony is that while Vice President Biden is promoting fracking overseas, President Obama’s environmental allies are opposed to both its use in the U.S. and export of he cheap natural gas produced to a Europe heavily dependent on Russian energy. Green advocates view fracking as dangerous both in itself and as a driver of increased use of the fossil fuels they despise.

So far that political pressure has kept applications for permits to export U.S. natural gas bottled up in the bureaucracy. The administration has approved seven permits, including one just after Russia’s annexation of Crimea in March. But 23 others are still pending. “Its slow-walking of liquefied-natural-gas plant permits is of a piece with its failure to approve the Keystone pipeline and get new trade deals done,” says James Lucier, an energy analyst with Capital Alpha Partners in Washington. “It’s all a sign of just how disengaged from the rest of the world the Obama folks have become.”

At last month’s joint summit between the U.S. and the European Union, Herman Van Rompuy and José Manuel Barroso, presidents of the European Council and the European Commission respectively, pleaded with Obama to come up with ways for European companies to obtain more licenses to export U.S. shale gas in liquid form to Europe.

While Obama didn’t rule out that he might agree to such an idea in the future, he stressed instead the need for energy conservation and for Europe to diversify its sources of energy in order to make it less dependent on Russia. He insisted that any U.S. move on natural-gas exports must not dilute any existing consumer or environmental regulations. 

The Europeans admit both privately and publicly to being frustrated. “What we are asking for is a willingness of the U.S. side to be more pro-active on licenses,” said João Vale de Almeida, the EU ambassador in Washington. “What has changed in the last few weeks is the realization in America that energy is used as a political tool by Russia.”

Hungary’s ambassador-at-large for energy security, Anita Orbán, bluntly said: “What Central Eastern Europe and the EU in general needs right now is the additional volume of gas. The most viable option Central Eastern Europeans have today is LNG.”

The U.S. Energy Department responds that given the time it takes to build new facilities the earliest natural gas exports wouldn’t even arrive until late next year. But Orbán insisted that Energy’s mere issuance of permits to export gas could “immediately change the business calculus of infrastructure investments and send an extremely important message of strategic reassurance to the region.”

So far the administration, under pressure from its environmental allies, is exhibiting no sense of urgency on an issue that should be a no-brainer. 

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