By Zoltan Zigedy
July 26, 2017
Literally days after my last post on the changes in US energy policy and its influence on the trajectory of US imperialism, President Donald Trump and his energy secretary proclaimed those changes in their customary blunt and bombastic way. On June 29, Trump declared a US policy of “energy dominance” at a meeting at the Department of Energy. Reuters‘s headline on their coverage perfectly captured the meaning of this policy: “Trump Seeks to Project Global Power through Energy Exports.” Bloomberg News’s Gennifer Dlouhy quotes Trump: “We are a top producer of petroleum and the No. 1 producer of natural gas. We have so much more than we ever thought possible. We are really in the driver’s seat.”
Clearly, Russia is a target of the emerging policy. The Administration’s Secretary of Energy, Rick Perry said that “… the entirety of the EU totally get it that if we can lay in American LNG [liquefied natural gas] … we can be able to have an alternative to Russia…” “The US will be able to clearly create a hell of a lot more friends by being able to deliver them energy and not being held hostage by some countries, Russia in particular.” (Reuters)
Lest anyone fail to get the message, Trump told cheering Polish people in Warsaw on July 6: “We are committed to securing your access to alternate sources of energy, so Poland and its neighbors are never again held hostage to a single supplier of energy.” (CNBC) Instead, they will be held hostage to the US.
Bloomberg’s Dlouhy notes that negotiations have begun to sell more LNG to the Republic of Korea. And Reuters’s Timothy Gardner comments that the US exports more petroleum products to Mexico than does any other country. In fact, according to Gardner, the US is already the world’s largest exporter of refinedpetroleum products.
Despite the near total neglect of the foreign policy implications of this emerging policy by US commentators and, especially, the left, they have not gone unnoticed in important circles internationally. Writing in the largest circulation UK paper, The Sunday Times, Irwin Stelzer stated on July 2: “LNG has created a new Great Game, with America’s ‘yuge’ reserves of natural gas giving Trump a weapon with which to offset Russia’s early lead.” Talk of “Great Games,” of course, invokes memories of the imperialist rivalries and clashes of the late 19th and early 20th century. While the “Russia-gate” controversies uncritically consume many US observers, even conservative Europeans are identifying thematerial interests, the imperialist interests standing behind the hysterical anti-Russia campaign.
Further, Stelzer sees the recent Gulf States’ aggression against Qatar for what it is: “… the Saudi royal family believe now is the time to wring a total surrender from Qatar… The implication for the global LNG market of a potential isolation of Qatar [the world’s largest exporter] could not be more consequential.” And it could not be more beneficial to the emerging US LNG shippers.
The recent Trump European trip was a sales trip for US LNG as much as it was participation in the G20 summit.
OPEC ‘Monopoly’ versus US Hegemony
It appears more and more likely that the era of OPEC dominance of energy markets is dwindling, broken by US energy production. Saudi Arabia attempted to reverse the expansion of US production by over producing and driving the price of oil below a level that would allow US shale producers to be profitable. Consequently, US operators lost $130 billion since 2015. But Wall Street has subsidized the shale industry by ploughing $57 billion back into the industry over the last 18 months, a move that shows both no fear of a price war and a determination to dominate the markets. The Wall Street Journal (7-8-2017) likened the investments to the tech boom of the past.
At the same time, the US is using political sanctions to hinder competitors. The recent Senate vote on Russian sanctions is one obvious example. But Iran is another competitor that the US hopes to discourage. The European sanctions are now lifted, but EXXON MOBIL and CHEVRON, as US companies, are still deterred from investing in Iran because of remaining US sanctions. BP is afraid of those sanctions and only French TOTAL has dared to invest, along with CHINA NPC. Where Iran is seeking $92 billion in energy investments, it has only secured $1 billion.
Worldwide, most energy investments have channeled to US shale oil.
The monopoly price-manipulation model enforced by OPEC discipline is eroding. Since competition is intensifying, pricing has become extremely volatile. With Chinese imports of crude oil up 13% this year, the Saudis have sharply cut the price of super light crude to Asia to garner a greater share of this burgeoning market.
Of course, it is impossible to spell out all of the foreign policy implications of the new energy imperialism. But it appears certain that the US drive toward energy dominance will reshape US imperialist designs and generate a strong international response.
The House of Representatives companion bill on sanctions passed 419-3, demonstrating again the ruling-class consensus on punishing oil and gas producers– Russia and Iran. The European Union wisely interprets this and its Senate companion as a challenge to existing energy relations. As The New York Times reported (July 25) immediately after the vote: “…the new sanctions have important implications for Europe because they target any company that contributes to the development, maintenance or modernization of Russia’s energy export pipelines.” It notes that: “Jean-Claude Juncker, the president of the European Commission, the bloc’s bureaucratic arm, has called for an urgent review of how the European Union should respond.”
Speaking to the “principles” behind the House bill, Russian “Alexey Pushkov, a legislator and frequent commentator on international relations, wrote on Twitter: ‘The exceptional nation wants to block Russian gas supplies to Europe and to sell expensive shale gas from the U.S. to its European servants. That’s the entire ‘morality’ of Congress,’” as reported by The New York Times (7-25-17)
And the price war between the US and OPEC along with its friends has left OPEC unity in danger and its policies in shambles. At the most recent meeting in St. Petersburg, disputes over production and exports have combined with frustration over the effectiveness of agreements. States are conflicted over protecting prices and earnings or fighting for market share.
Where unbridled competition arises, conflict is soon to follow. With economic interests joining with political maneuvering, as the US-contrived hysteria over Russia and Iran instantiates, the danger of aggression and war grows exponentially.
The new US imperialist “Game” is played to dominate energy markets, an even more perilous project that threatens friend and foe alike.