If President Obamaās tired of being humiliated by Russiaās Vladimir Putin, he has at least one way to get his mojo back: Apprź¦ove the Keystone XL Pipeline.
Putin has slapped Obama for months, granting asylum to NSA leaker Edward Snowden, backing Syriaās murderous regime and most ź¦¦recently exploiting the administrationās confused response to Syriaās use of chemical weaponsā to effectively seize control of US policy, at least for now.
Then came yesterdayās insulting op-ed āØin The New York Times, where Putin essentially called Obama a liar even as he smirkingly claimed their relations are improving.
Obama can turn the tables by doing everything possible to boost global oil and gš§as production ā starving Moscow of money and power. Russia, you see, is utterly dependent on oil and gas revenues, which make up 70 percent of its exports and 17 percent of its economy.
Approving the Keystone XL Pipeline would mean helping to tap the worldās third-largest oil reserves ā the Athabasca oil sands in Alberta, Canada. To date, Obama has stź¦alled Keystone to appease environmentalists ā even at the expense of angering labor-union allies, who want the jobs and economic growth Keystone represents.
But a need to neuter Russia ought to tip the balance ā and the president, by OKing Keystone, would sent a stark signal that the recšent surge in US oil and gas production is not a one-off, but only the start of an enduring increase in North American energy output.
US oil and gas production is climbing largely due to the technological breakthrough known as fracking. In July, oil production averaged 7.5 million barrels per day, the highest since 1991.š½ By next month, the IEA says US energy output could top imports for the first time since 1995. By 2020, the United States is expected to eclipse Russia and Saudi Arabia as the worldās No. l oil producer.
Combined with conservation measures and production increases elsewhere,š“ tš his US energy boom has kept a lid on global oil prices, weakening Russiaās fragile economy. The latest figures show that Russiaās economy actually shrank in the past two quarters. Economists predict some improvement in the second half, but growth for the year overall will likely be less than 2 percent.
Thatās a big drop from the 7 percent-plus grāowth Moscow notched for most of the past decade, and not enough to satisfy the demands of a struggling country and a controversial leader.
In his most recent campaign, Putin promised to hike doctor and teacher pay, improve pensions and build up the military. But he needs money to make good on his pledges ā and about half of Russiaās š±government spending is financed byš° oil and gas revenues.
Lower global energy prices are already widenš ing this yearās Russian budget deficit; to reach balance, Moscow needs oil prices several dollars higher than they are today. And its debt ratings are alreadšy in the basement.
Oil and gas production is also vital to Russiaās power. Europe gets 34 percent of its natural gas from Russia; Eastern Europe is even more š dependent. Moscow has twice intentially caused widespread shortages of natural gas in Europe by cutting off exports via Ukraine in the midst of winter.
Thšat stranglehold on Europeās vital heating fuel will be increasingly undermined by US natural-gas exports. Obama recently approved three new gas-processing and -liquification facilities, which will pump 2 trillion cubic feet a year of new supply into global markets. And more gas production will flow from South Korea, Australia and š¤Ŗother producers, further weakening Russiaās clout.
Russiaās known oil reserves will last about 20 more years at current production rates; in the next decade the countryās leaders will have to invest massively in other sources of revenue. But they need high oilš¼ prices to finance that diversification.
The United States should do everythiš«ng possible to make sure the Russians donāt get the prices they need. The simplest way to do that is to encourage the development of all energy sources ā a policy that will also fuel our own prosperity.
Obama can put Putin in his place by playing the energy card to the max. And thereās no betterź©µ way to broadcast that gambit than by approvšÆing the Keystone XL.
Liz Peek is a columnist for TheFiscalTimes.com and a former energy analyst with Wertheim Schroder.