Russian Economy Dangerously Dependent On Oil & Gas Exports
American Experiment North Dakota has released a report detailing how American leadership on energy concerns, and a ramping up of domestic energy sources, can reduce Russia’s strategic leverage over European countries and help make the world a safer place.
In Energy Leadership: How American Energy Production Can Make the World Safer, Isaac Orr and John Phelan of the Center of the American Experiment note that Russia currently is one of the largest producers of energy on the planet, as the third-largest producer of petroleum and the second-largest producer of dry natural gas. Oil and gas exports, disproportionally important to the Russian economy, made up about 45 percent of all Russian exports in 2021. Essentially, the country is basically a giant oil emirate.
Meanwhile, the European Union (EU) relies heavily on Russia for the energy needed to power its member states. Russia supplies the EU with over a quarter of its crude oil imports and roughly one-third of its natural gas imports. Obviously, this provides Russian President Vladimir Putin with a large amount of leverage in his geopolitical strategy. For example, the authors point out, that German Chancellor Olaf Scholz has suggested that Germany, which receives over half of its natural gas and 30 percent of its crude oil from Russia, would most likely not support energy sanctions on the country after its invasion of Ukraine because Russian energy is of “essential importance” to daily life in the German nation.
However, the authors note that Russia’s dependence on its energy exports to fund its economy is a very dangerous source of potential weakness for the country, over the long term. Around a third of Russian imports are invoiced in U.S. dollars and the Euro. Russian access to these two currencies used to purchase a significant number of import goods is made from the sale of its energy sources. The less energy the Russians can sell, the worse it is for their economy, and the less likely it makes Russia able to finance acts of aggression against its neighbors in Eastern Europe, the Caucasus, and Central Asia.
The easiest way to reduce Russian geopolitical leverage is by ramping up the production of American energy sources, especially fossil fuels and nuclear power. Ramping up “renewable” energy sources alone will not allow the United States to achieve this objective. “Wind and solar are utterly incapable of delivering on this desired outcome, which means building more wind turbines and solar panels would simply double down on the failed policies that allowed Russia to leverage its energy sector for geopolitical gain in the first place,” the authors state. “Wind and solar are incapable of materially increasing energy security because they are unreliable, weather-dependent technologies that are primarily manufactured abroad using metals and minerals mined and refined in foreign countries.”
“Rather than impeding American [fossil fuel] energy production, we should fully embrace it,” the authors continue. “This would entail rolling back several initiatives enacted by the Biden administration that discourage domestic oil production and favor production by the Organization for Petroleum Exporting Countries (OPEC), and Russia. The U.S. should also construct new coal export terminals, allowing more American coal to reach global markets and allow European nations to diversify their fuel supply.”
Beyond this, the authors continue “the United States must make a concerted effort to build new nuclear power plants. Nuclear power plants are the only scalable source of electricity generation that can replace coal and natural gas, leaving more of these essential fuels available for export. A robust domestic nuclear power industry will also allow the U.S. to export reactor designs to other countries to compete with Russian and Chinese plant designs, which will enhance American influence abroad without the need for military deployment…. Embracing American energy production and export will enhance economic opportunities in the United States, provide our allies with the energy they need, and undermine a key revenue stream for…the Kremlin.”
“The role of Saudi Arabia and its oil industry in the collapse of the Soviet Union and the peaceful ending of the Cold War is a seldom commented on but important factor,” the authors conclude. “Vladimir Putin’s Russia is no less dependent on the production and export of oil and natural gas today as was the Soviet Union inherited by Mikhail Gorbachev in 1985. This weakness masquerading as strength is there to be exploited now, as it was then. And, as then, it offers an important tool in resolving international conflicts without resorting to military means. Maximizing the energy resources of the United States to the fullest will yield significant economic benefits, but its greatest legacy could be a more peaceful future.”
The following documents provide more information about energy sources.
Energy Leadership: How American Energy Production Can Make the World Safer
This report from American Experiment North Dakota outlines the need for American energy leadership to make the world a safer place.
The 100 Percent Renewable Energy Myth
This Policy Brief from the Institute for Energy Research argues that a countrywide 100 percent renewable plan would put the U.S. economy in jeopardy. The brief investigates the intermittency, land requirements, capacity factors, and cost of transition and construction materials that limit the ability of the U.S. to adapt to 100 percent renewable energy.
The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.
Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).
The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.
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