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Top three energy issues likely to come up in foreign policy debate

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Michael Bastasch DCNF Managing Editor
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Monday’s presidential debate will feature tough foreign policy issues, likely including energy’s impact on the world stage.

Last week Secretary of State Hillary Clinton said that energy issues were a “matter of national security and global stability” to an audience at Georgetown University.

“It’s at the heart of the global economy,” she told the crowd. “It’s also an issue of democracy and human rights. And it’s been a top concern of mine for years, but certainly these last four years as secretary of state, and it is sure to be the same for the next secretary.”

As the world becomes increasingly economically and politically connected, energy policy here in the U.S. can have tremendous effects around the world, just as foreign energy policies can have effects here in the U.S.

So, what are some of the top energy issues facing the country? The Daily Caller News Foundation has come up with a list of three energy topics that could come up when President Barack Obama and Republican challenger Mitt Romney meet for their final debate.

Energy independence

Politicians since the 1970s have been promising energy independence in order to help wean the U.S. off of foreign oil and prices uncontrollable prices, but the U.S. has not gotten there quite yet. This election, both presidential candidates have promised to make the country energy independent by 2020.

Proponents of energy independence argue that it would keep the U.S. from having to respond to the whims of an “unpredictable carte” — meaning OPEC.

“This goal is now within our reach as long as federal policymakers make the right choices,” writes Republican Rep. Fred Upton of Michigan. “By following a formula that relies on cutting red tape, encouraging investments, and developing resources wisely, we can fulfill this aspiration within the next decade.”

Approving the Keystone XL pipeline would greatly help, argues Upton, as it could bring up to 1 million barrels per day to the U.S.

“So far this year the United States has produced 6.2 million barrels per day (mbpd) of crude oil plus lease condensate (which is the definition of oil) versus daily net consumption of 13.6 mbpd of finished petroleum products,” writes Kurt Cobb on OilPrice.com.

The U.S. imports 45 percent of its petroleum supply, mostly from Canada and Mexico, according to a report from Deloitte. This could also have the impact of strengthening the U.S. diplomatic position against Russia and China.

“Growing North America shale resources look poised to strengthen the U.S. economic and diplomatic position vis a vis China just as it has already done vis a vis Russia,” writes Amy Myers Jaffe, Executive Director for Energy and Sustainability at the University of California, Davis.

“US shale gas has already played a key role in weakening Russia’s ability to wield an energy weapon over its European customers by displacement,” Jaffe added.

However, being energy independent — by producing enough energy to meet our demands at home — would not mean the U.S. would be immune from international pressures on energy prices because oil prices are set globally.

“Commodities such as oil can be used in China just as easily as Ohio,” writes Ben Adler for Reuters. “Therefore, the price is set by the equilibrium between global supply and global demand. Unless we nationalize the oil companies, American consumers will be bidding for gasoline against drivers in other countries. This is how markets work.”

Liquefied natural gas exports

The Obama administration has continually delayed approval of more natural gas exports and export terminals, drawing the ire of Republicans who charge that this hurts economic growth and job creation.

Democrats argue that exporting will raise prices and hurt consumers.

“Exporting natural gas will do one thing: raise prices,” writes Democratic Rep. Ed Markey of Massachusetts. “But if that happens, natural gas consumers will be exposed to higher prices and greater market volatility — in much the same way that the global oil market routinely rips off consumers at the pump.”

The Energy Information Administration predicts that natural gas price will rise, even without considering exports. With exports, the EIA predicts that rapidly increasing LNG export levels would lead to “large initial price increases that would moderate somewhat in a few years.” Slowly increasing LNG export levels will lead to more gradual price increases, but the end result will be higher average fuel prices after that, in particularly between 2025 and 2035.

Exporting more natural gas has drawn the ire of major producers like Russia. Gazprom, Russia’s state-owned gas company, has called the U.S. natural gas boom “unsustainable.” They even paid a Washington, D.C.-based consulting firm to lobby to get the U.S. to import Russian natural gas and to collect data to promote Gazprom interests.

“Today, U.S. companies are now working in China and Europe to help those countries develop shale gas, which could also help the U.S. achieve strategic geopolitical goals,” writes the National Journal’s Coral Davenport. “Russia, the chief supplier of natural gas to Europe, has long wielded that resource as a power lever.”

It’s even been suggested that Russia is a major player behind the anti-fracking movement in the U.S., as they stand to lose the most if more exports drop worldwide natural gas prices and Gazprom customers in Europe and Asia switch to U.S. produced gas.

“Where does the money come from to organize such [anti-fracking] demonstrations and brochure writing?” said Aviezer Tucker, the assistant director of the Energy Institute at the University of Texas. “All that seems to point to a common source, which would be Moscow.”

Climate change

U.S. domestic policies to stem climate change have already gotten it into international trouble with China, most notably with the Obama administration slapping high tariffs on Chinese-made solar cells.

The Commerce Department recently issued its final determination on Chinese companies of anti-dumping duties from just over 31 percent up to 250 percent percent on photovoltaic solar cells and anti-subsidy duties of up to more than 15 percent were also recommended.

“It will inevitably lead to a rhetorical rebuke from Beijing and a reminder that China is challenging U.S. anti-subsidy policy at the World Trade Organization and in US courts,” Lincicome added. “But it also could lead to a more forceful response from China in the form of a new trade remedies investigation or a WTO dispute against US green subsidies.”

China and the U.S. are already embroiled in investigations over the nature of their green energy programs, and critics charge that these policies are causing a trade are between the two nations.

“[W]e remain concerned about the growing global trade war, which will only hurt American solar industry jobs, growth and consumers,” Jigar Shah, president of Coalition for Affordable Solar Energy — which opposed the tariff — said in a statement.

There’s also the issue of carbon emissions regulation. The European Union has already extended an its carbon emissions tax to all international airlines flying to and from the EU — including U.S. airlines — and now they are looking to extend this scheme to international shipping.

“The European Union is threatening a new set of taxes on Americans. After introducing an illegal tax on all flights to and from Europe, the EU announced that it wants to force a similar scheme on shipping,” said Republican Rep. Jim Sensenbrenner of Wisconsin in statement calling on the Obama administration to act in order to block the tax.

Apart from efforts to impose a carbon tax at home, the international community has been pushing for a carbon tax for some time, which will greatly disadvantage countries heavily reliant on fossil fuels — which will have major geopolitical impacts.

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