Strong Energy Policy Can Be Strong Foreign Policy (Crimean Crisis Solution)

Coal is not as clean as natural gas nor is it as economical.  However, we have a lot of it and it has been very successful at powering America for a very long time.  Absent the Crimean peninsula crisis, I would be an advocate for more gas and less coal.  With sanctions being considered as our only response to the Crimean crisis, I think we should reconsider coal.  Not as a long term strategy, but as an intermediate strategy to help defeat the Russians economically.  That way we can avoid the need to defeat them militarily if they invade one of our NATO allies like Poland, Latvia or Estonia.

By the way, in an earlier blog entry I proposed that America conduct military exercised in some of our NATO allies’ countries near the Black Sea.  I am not a war monger, but I believe that if America does not show that it has the will and the might to fight if needed, we will be viewed as weak.  Our signal of weakness is giving Vladimir the green light to take more of the Ukraine and possibly some territory of our NATO allies.

The Environmental Protection Agency is close to implementing new air pollution regulations that make it near impossible to burn coal.  We need strong regulations to protect our environment.  However, before the most recent round of regulations, we burned coal more cleanly than any other large user in the world.  Coal burning power plants have been closing at a high rate due to both the new regulations and the economies of natural gas.  America is now the world’s largest producer of natural gas.  We are the Saudi Arabia of natural gas.  Why don’t we get rich off the stuff just like the Saudi’s got rich off of oil?  In the near term, our goal should just to be able to sell it inexpensively to the Europeans.  Economic sanctions against Russia may cause some economic pain in Europe.  Cheap natural gas will help mitigate some of this pain.  After the economic turmoil is mitigated – then we can get rich from our natural gas.

This should be taken up as an urgent matter.  We can build pipelines, tank filling terminals at our ports, and hundreds of tank ships to get the gas to Europe.  All of which mean JOBS.  Then we can sell our natural gas to Europe and cut off their dependency on the Russians.  We should work with the Canadians to build two pipelines: the currently planed XL pipeline to the Gulf of Mexico, and a second pipeline to the east coast of Canada to export their oil to Europe.  This will eliminate Europe’s dependency on Russian oil.

Eventually we will build up our natural gas producing capacity to supply both Europe and have enough left over to close those "not as clean as gas" coal burning plants.  But, do not shutter those plants when they can be used as a peaceful means of settling geopolitical conflicts.  America won the cold war by beating down the Russian economy.  President Reagan spent so much money on defense that the Russians had to increase its spending just to keep up.  Unfortunately for the Russians, their economy was not strong enough to maintain the necessary military without eliminating the bread and butter its people rightfully demanded. 

Do you remember the Iron Curtain being torn down in Berlin?  We won the cold war but have allowed our enemy to regroup.  Our enemy now believes that they are stronger than we are.  Could they be right?  They would only be correct if we do not stand up to the challenge they are presenting us with.

Russia’s economy is again on shaky grounds.  If they lose their trade with Europe and America, they will be severely impaired.  The Russians will sell their fossil fuels to the Chinese but the Chinese are not stupid.  They know they will be able to purchase that fuel at bargain basement prices.  Furthermore, the Chinese will not be able to purchase the full quantity of fossil fuel that Russia sells to Europe.  If the West cuts off trade with the Russians, the Russians will suffer much more than the West.  America will hardly feel the effect.  On the other hand, European countries will be impacted, but not as severely as the Russians.  Note to the EU; start building natural gas cars and the infrastructure to refuel them.  That will help your economy.  America may be willing to strike a deal with you for those cars (to help you in your time of need).  That is if we have the sense to build our own refueling infrastructure.

All of the natural gas that comes from federally owned land should be taxed to pay for the construction necessary to build the exporting infrastructure.  And, we should encourage more drilling on federal land to raise more revenue. The taxes should be limited to only pay for the infrastructure.  The increased pricing from these temporary taxes will also make coal viable for the intermediate period of time needed to force the Russians to behave as civilized people.  For the time being, we need to keep energy prices cheap so that the Europeans can manage their way through the economic difficulties that reduced trade with Russia will bring.  In the future, only exported gas should be taxed (and at higher rates) and the revenue from those taxes should be used to pay off our national debt.

If we continue to use coal for an intermediate time period, we will have enough natural gas to tax it and still sell it to the Europeans at a lower price than they are paying the Russians.  In the interim, the currently projected reductions in America’s energy prices will not be realized.  This will cause some economic pain to America.  Some Europeans are hesitant to follow America’s lead on sanctions against Russia because they will be more impacted than America.  With this plan, that argument is minimized.

America should help Europe finance its importing infrastructure (port terminals and pipelines).  The jobs created in Europe will also be good for their struggling economies.  Think of this plan and the Marshal Plan Part II.  Part I was intended to rebuild Europe and prevent another World War.  Part II is intended to render the largest threat to world peace impotent.

Along with the EU, America should negotiate trade pacts (or revise existing trade pacts) that give advantages to countries that sign onto the sanctions against Russia.  This discussion is not going to lay out the complete set of economic sanctions that the West needs to impose on Russia.  Banning the purchase of Russian fossil fuel if a suitable replacement can be provided by America, Canada, Mexico, or other oil producing, stable democracies is the obvious one discussed here.  Fossil fuels are Russia’s life line.  Without its revenues, the Russian economy collapses.  Without money you cannot maintain a military and conduct land grabs.  Without money, people get very angry and demand better of their government.  Most times they demand a new government.

At the end of the cold war, the Russian people demanded a new government – and they got one.  We should have done more to help it succeed when it was struggling to become a true democracy.  This is a lesson learned that can be applied if we win the new cold war.

To repeat the earlier statement: This is an urgent matter that should be taken up with the same vigor that America exercised after being attacked by Japan at Pearl Harbor.  This is not war preparations.  This is war prevention.  If we fail at this, we may need to conduct real war preparations.  Even if the doves believe that there is no chance of war with Russia, can we not convince them of the economic advantage to America being an exporter of natural gas and Canada selling oil to Europe?

If we truly demonstrate the resolve to urgently build the proposed infrastructure, America will be viewed as strong.  Currently America is viewed as very weak.  The world needs a strong America.  Strong energy policy can be strong foreign policy.