Russia is feeling the pain of increased U.S. oil and gas production. Surging U.S. oil production has been the major cause of the 60 percent drop in oil prices since June 2014. Russia’s budget depends on oil revenues and the loss of income from oil sales is putting the country into a recession. The natural gas production boom in the United States is also causing Russia heartaches, as Russia controls most of European gas sales and is dependent on that revenue. The fact that the United States is building liquefied natural gas export terminals that can provide natural gas to Europe is making Russia uncomfortable. Both the oil boom and the natural gas boom in the United States are due to hydraulic fracturing used in conjunction with directional drilling.
It appears that Russia has been funding environmental groups in the United States, who are against fossil fuel production and against hydraulic fracturing, in order to promote policies against the U.S. production of oil and gas and against their export to foreign countries. Russia is targeting hydraulic fracturing because it is revolutionizing energy politics, by offering cheap, new sources of energy. By offering Europe potential independence from Russian energy exports, hydraulic fracturing poses a direct challenge to Russia. Because President Putin depends upon his oil and natural gas exports for revenue, hydraulic fracturing’s cheaper alternative presents him with a big problem. Lower oil prices are driving Russia’s economy into recession.[i]
Russia’s vendetta against U.S. oil and gas production also includes the Keystone pipeline, which would supply Gulf Coast U.S. refineries with heavy crude oil from friendly Canada – instead of Venezuela. Russia is not the only country that would benefit from reduced U.S. and North American oil and gas production—so would all other oil and gas producing countries, in particular Venezuela and Iran.
Russia’s Devious Methods
The Environmental Policy Alliance produced a well-documented report that shows tens of millions of dollars from Russian interests flowing to major environmental lobbying organizations, including the Sierra Club, the Natural Resources Defense Council and the League of Conservation Voters, through an intermediary company in Bermuda. Recently, there have been a number of stories in the press on Russian support of American environmental groups, including a very detailed description of the money flows, by the Washington Free Beacon. These environmental groups supported President Obama’s bid for reelection in 2012.[ii]
The Russian SVR, which is equivalent to our CIA, is gathering intelligence on the American energy industry. Recently, the Justice Department charged two SVR cover officers and an SVR agent with spying on “United States’ efforts to develop alternative energy resources.” [iii]
And, Russian intelligence’s biggest cover operation — its RT “news” outlet — is undertaking a massive propaganda campaign against hydraulic fracturing. Propaganda against hydraulic fracturing is provided under a façade of facts because they know that in today’s world, a façade is all that’s necessary. Because Western populations are largely uninformed about hydraulic fracturing, Russia is able to “guide” lightly informed citizens toward its agenda.
Alaskan Oil Prospects
The Russians have been exploring for oil in its Arctic offshore, while the Obama Administration has been making it increasingly difficult for current owners to exercise their Arctic leases off the Alaskan coast and closing off onshore oil resource areas like ANWR. Russia has made claims to the Arctic oil and gas reserves, including a find by Exxon that Russian-state run Rosneft claims could rival the amount of oil in the U.S. side of the Gulf of Mexico.[iv] One of Russia’s obvious goals is for the U.S. government to continue to lock up Alaskan oil and gas reserves so only Russia produces oil in the arctic.
Last week, President Obama announced that he wants to permanently stop oil and gas development on much of Alaska’s North Slope, even though the development over the last few decades has proved to be economically beneficial, environmentally safe and animal friendly. This is precisely what President Putin would like to see for he would like those resources to be saved for his use if he can recreate the Russian Federation.
Evidence now shows that the Russians have helped environmental groups who have urged officials of the Obama administration to undermine oil and gas exploration and development, economic growth and job creation in the United States. Though there are potential violations of U.S. laws by the direct and indirect recipients of the Russian-guided monies, no actions have been taken to date.
Efforts against oil and gas production will only increase. Facing the collapse of its energy-export market, the destruction of its energy-blackmail capabilities, and the depletion of its foreign-exchange reserves, Russia regards the huge new supplies of unlocked energy via hydraulic fracturing as a critical national-security threat. Thus, for President Putin, probably no option will be off-limits. Americans would be well-advised to watch closely the actions of Russia and its relationship with self-described green groups who oppose accessing North American energy supplies. Desperate people do desperate things, and Mr. Putin is getting increasingly desperate.
[i] National Review, Russia’s War on Fracking, February 3, 2015, http://www.nationalreview.com/article/397755/russias-war-fracking-tom-rogan
[ii] The Washington Times, The Russian money pipeline, February 2, 2015, http://www.washingtontimes.com/news/2015/feb/2/richard-rahn-vladimir-putin-funding-opposition-to-/
[iii] National Review, Russia’s War on Fracking, February 3, 2015, http://www.nationalreview.com/article/397755/russias-war-fracking-tom-rogan
[iv] Bloomberg, Rosneft Says Exxon Arctic Well Strikes Oil, September 27, 2014, http://www.bloomberg.com/news/articles/2014-09-27/rosneft-says-exxon-arctic-well-strikes-oil