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Putin wants a ‘Dark OPEC’ to control global oil and gas markets

The Hill logo The Hill 1/13/2019 Merrill Matthews, opinion contributor

a man sitting at a table using a laptop: Putin wants a ‘Dark OPEC’ to control global oil and gas markets © Getty Images Putin wants a ‘Dark OPEC’ to control global oil and gas markets Democrats now control the House of Representatives and Speaker Nancy Pelosi has made it clear they want to transition away from fossil fuels to renewable energy sources. However, countries that could pose a serious threat to U.S. security and the economy are doubling-down on their efforts to extract and control even more fossil fuels.

In her acceptance speech upon being reelected speaker, Pelosi claimed she would focus on what she called the "climate crisis" as "an economic decision for America's global preeminence in green technology; a security decision to keep us safe."

By contrast, Russian President Vladimir Putin, unencumbered by an environmental vision of a carbon-free economy, is engaged in a global effort to unite authoritarian regimes with significant fossil fuel reserves.

Putin envisions a kind of "Dark OPEC" that controls enough of the world's crude oil and natural gas to manage supply, dictate prices and engage in political mischief.

For example, Putin has been casting a financial lifeline to Venezuela's strongman President Nicolas Maduro in return for a significant share of several Venezuelan oil and natural gas fields. In addition, Venezuela has reportedly signed over a major share of Citgo, a U.S.-based but Venezuela-owned oil refiner, pipeline operator and marketer, as collateral for Russian-provided loans.

Interestingly, Putin supplied Caracas with two Tu-160 supersonic bombers, which seems odd given the country can't feed its people, keep the electricity on or even supply toilet paper. Venezuela's problem is its citizens fleeing, not countries threatening to take over.

The Hill reports that Russia pulled the bombers after complaints from Secretary of State Mike Pompeo, but the suffering Venezuelan people, other South American countries and the U.S. understood the message: Maduro has powerful friends in low places.

Russia is heavily involved in the Middle East, especially in ensuring Syrian President Bashar al-Assad remains in power and providing financial and technical assistance to Iran and even Iraq in an effort to become the leading powerbroker.

The result is that Russian influence is growing over a critical swath of the oil- and gas-rich Middle East, which could pose a number of future problems for world energy markets.

According to the U.S. Energy Information Administration, the U.S. is now the top crude oil producer, with 15.6 million barrels per day. Longtime U.S. ally Saudi Arabia - though that relationship has been strained because of the murder of a U.S. journalist - comes in second with 12 million bpd.

However, Russia produces 11.2 million bpd, Iran 4.7 million and Iraq 4.5 million. Add in Venezuela's 2.3 million bpd and you have 22.7 million barrels per day. Less than the combined U.S.-Saudi total, but enough to manipulate world markets if Russia manages to consolidate its efforts.

And Saudi Arabia just announced it plans to cut crude oil exports to 7.1 million bpd, down from 7.9 million last November.

Given those evolving geopolitical forces, it is absolutely critical that the U.S. not just maintain its drive for energy independence, but seek energy dominance.

While the U.S. produces more natural gas than it consumes, it hasn't reached that point with respect to crude oil. We are still about 4 million barrels per day short of self-sufficiency.

Pelosi's notion that "green technology" will keep us safe is a throwback to the mid-1970s, when U.S. oil and gas production had seemingly "peaked," leaving us vulnerable to OPEC countries wanting to punish us for supporting Israel.

In response, Congress began passing legislation, such as subsidizing ethanol production, in the hope of creating renewable energy alternatives to fossil fuels. But that was before the fracking boom that began about a decade ago made the U.S. the top oil and gas producer.

There simply is no alternative to fossil fuels. After eight years of the most pro-renewable energy president the country has ever had, Barack Obama, and billions of taxpayer dollars, solar and wind power increased from about 5 percent of the country's electricity generation to 8 percent. And while sales are increasing, electric cars remain a rounding error in total U.S. car and truck sales.

U.S. security and the economy face numerous existential threats and we must have the energy security to meet them. Those Russian Tu-160 supersonic bombers weren't plug-ins, and China didn't send its lunar rover to the moon with solar power.

Renewable energy may play a bigger role in the future, but it won't make us "safe" - and neither will Pelosi's green-energy dreams.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.

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