Biden's Berlin Gas Airlift

"Energy is Russia's most potent nonnuclear weapon, so it's no surprise that Vladimir Putin is leveraging it as he threatens Ukraine. Europe's climate obsessions have made it vulnerable to Russia, and so the Biden Administration is riding to the rescue by begging the Arabs and other energy producers to boost natural gas deliveries.

Russia typically supplies about 40% of Europe's gas imports, but it has sharply truncated deliveries. Kremlin officials are threatening to cut off supply if the U.S. and Europe impose sanctions in response. Germany is especially dependent on Russian gas, which is why it has been reluctant to help arm Ukraine.

A Russian gas embargo could starve households of heating fuel this winter and potentially next if there's a hot war in Ukraine. Gas might have to be rationed. Manufacturers could be forced to shut down, further damaging the economy and supply chains. At this perilous moment, it's worth recounting how Europe got itself into this cold mess.

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Germany has made itself even more dependent on Russian gas by shutting down nuclear plants, which provide low-cost baseload power. Even as Russia reduced gas deliveries, Germany in December shut down three nuclear plants, and three more will be mothballed this year.

The Trump Administration pressed Germany to build liquefied natural gas (LNG) import terminals to diversify its gas supply, as Poland, the Netherlands and Lithuania have done. But German LNG terminals are snarled in permitting delays. One company last year decided to turn an LNG project into a green hydrogen hub. This won't heat homes.

Across most of Europe, coal plant shutdowns have also left Europe more dependent on gas. So have heavily subsidized solar and wind, which must be backed up by gas. As wind production lagged last summer and fall, gas demand and prices soared.

As a result, Europe entered the winter with little gas in storage. Russia exploited this by slowing gas deliveries. While rising gas prices send a market signal for power retailers to use more coal, Europe's cap-and-trade program discourages this switch even when gas prices are surging.

All of this explains why the Biden Administration is now scrambling to locate spare gas to rescue Europe from Mr. Putin's tender mercies. U.S. LNG exports are nearly maxed out, and many cargo ships are already headed to Europe. More U.S. LNG export capacity is expected to come online later this year, which will make America the world's top LNG exporter.

Other major LNG producers such as Qatar and Australia may be able to boost supply to Europe at the margins. But Europe could still be staring into a long, dark winter if Russia imposes a gas blockade. It's hard not to wonder how European leaders didn't see this coming in 2014 when Mr. Putin invaded Crimea.

The self-created energy vulnerability of the West is one of the horrifying marvels of the age. You have to go back to the disarmament of the 1920s to recall a time of such willful self-delusion. Even as President Biden races to rescue Europe, his Build Back Better plan would send the U.S. down the same road of energy disarmament.

White House officials say Russia and Europe are interdependent since the Kremlin relies on oil and gas revenue to fund its budget. But Russia has other energy clients, including China. Gazprom is building gas pipelines to China. Even as Europe becomes more dependent on Russia for gas, Russia is becoming less dependent on Europe for revenue.

One predictable result will be shortages and higher prices. Doesn't President Biden understand that inflation and high energy prices empower the very people he claims we are fighting in a long, twilight struggle?" [1]

1. Biden's Berlin Gas Airlift
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 27 Jan 2022: A.16.