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US Policies toward Liquefied Natural Gas and Oil Exports: An Update

US Policies toward Liquefied Natural Gas and Oil Exports: An Update

Full Title: US Policies toward Liquefied Natural Gas and Oil Exports: An Update
Author(s): Cathleen Cimino and Gary Clyde Hufbauer
Publisher(s): Peterson Institute for International Economics
Publication Date: July 1, 2014
Full Text: Download Resource
Description (excerpt):

Unconventional extraction methods, namely horizontal drilling and fracking, are transforming global energy production, consumption, and trade. The extraction of large amounts of oil and gas from shale formations has led to an unprecedented surge of domestic production in the United States. The US Department of Energy (DOE) is now processing more than 40 applications from domestic producers to export liquefied natural gas (LNG). While experts still disagree about the magnitude and duration of the energy boom, we are at the “dawn of a US oil and gas renaissance” (Houser and Mohan 2014).

The foreseeable reduction of oil imports and increased access to cheaper natural gas have not only changed the traditional US energy trade balance but also have clear implications for US foreign policy and global energy security. In particular, by facilitating energy trade with Europe and lowering Europe’s dependence on oil and gas from Russia, the United States can o set Europe’s vulnerability to Russian energy diplomacy in the wake of President Vladimir Putin’s adventurism in Ukraine and subsequent Western sanctions against select Russian targets. Indeed, in the context of the Transatlantic Trade and Investment Partnership (TTIP), the European Union has renewed its push for the United States to make a “legally binding commitment” guaranteeing unrestricted crude oil and gas exports, with specific reference to the current crisis in Ukraine and “the delicate situation faced by the EU with regard to energy dependence.” More broadly, helping mitigate domestic vulnerability to oil shocks and high prices are another draw, especially given the potential for increased instability in the Middle East.

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