Republican U.S. Senator from Alaska Lisa Murkowski has suggested that the United States use its home grown oil and gas as a diplomatic tool, and that the increased production of American oil and gas needs to be used as strategic assets globally. In other words, we use our oil resources as a means of bending other countries to our will.
Senator Murkowski’s comments were in reaction to the developing crisis is the Ukraine, which has had an impact on crude oil prices. While it’s true that the United States is in the midst of an of a natural gas boom, thanks to the wide spread use of fracking, our supplies are hardly so secure that we can threaten to turn off the spigot on other countries.
If more American oil and gas were to enter the global market, it could cause global prices to drop by opening up another supply chain. We could also levy sanctions on countries like Russia, which isn’t playing very nice right now in Eastern Europe. Currently, rules and regulations held at the Federal Energy Regulatory Commission and Energy Department prevent exports of unprocessed American crude with, exceptions for Californian crude and oil from Alaska and sales to Canada.
Senator Murkowski is stumping for the removal of these restructions, as well as asking the government’s Energy Information Administration to conduct further analysis of the impact of authorizing more crude oil exports. At the same time, two Senate Democrats have expressed concerns that if such restrictions were removed, Americans might end up paying more that the pump. Flooding the market with cheap American crude oil could also cause other unfriendly countries, like Saudi Arabia or Venuezuala, to tighten their own supplies, keeping the amount of oil in circulation low, and prices high. Oil, it seems, is a double-edged sword.
The answer is unclear and will remain that way for some time – 2014 is an election year and neither party is going to be making any policy assessments concerning exporting America’s oil and gas.