/ world today news/ “The United States is trying to fail the Russian South Stream gas pipeline project because they want to supply gas to Europe,” Russian President Vladimir Putin said this week.
“They are doing everything to prevent this contract. They say that Europe is too dependent on Russian gas. We believe that our partner has the right, can and should create the most favorable conditions for himself, have contacts and contracts with many partners. We are also doing this: we recently signed a contract with the People’s Republic of China and will continue to sell our raw materials in developing markets,” the Russian leader said. Thus, by stopping the project, the EU scores its biggest own goal in history and risks losing to China and the US in the energy battle for the new status quo. On closer inspection, the American push is simple math: Once South Stream reaches its full capacity of 63 billion cubic meters, it will generate $23.94 billion in revenue for Russia’s Gazprom at current prices. So the US has 23.94 billion very good reasons to do everything in its power to stop the project, especially if the oil lobbyists in Washington believe that some of the money might end up in their pockets. In May 2013, the administration of US President Barack Obama opened the way for more natural gas exports after approving a $10 billion facility in Texas. This is a key moment in making the US a leading supplier of energy to world markets. The decision reflects a turnaround in US energy trading, the Wall Street Journal reported last year. In another story earlier, the Wall Street Journal reported that US refiners are selling more fuel abroad than ever before, effectively exporting the US energy boom to the four corners of the world. US refiners in the Gulf of Mexico are increasingly using local oil, which is cheaper than the North Sea oil used by European refiners. This often means that diesel and other US-made fuels are a bargain overseas, even after shipping costs are added. While U.S. federal law prohibits the export of most U.S.-produced crude oil abroad, refineries can export petroleum products made from that oil, including gasoline, diesel, and jet fuel. After giving the green light to the Freeport LNG natural gas export project, the US Department of Energy signaled that it understood that the future benefits of energy exports outweighed concerns about possible problems in the US economy. Supporters of greater exports, including the oil and gas industry, say exporting the cheap natural gas would help the U.S. trade balance, boost the use of clean-burning fuels around the world and help energy-poor U.S. allies . The Department of Energy indicated that it had granted conditional approval to the Freeport project to export up to 39.6 million cubic meters of LNG per day. The permit is required for exports to countries with which the US does not have a free trade agreement, including major partners in Europe and Asia. Meanwhile, the US and the EU have renewed efforts to finalize a free trade agreement to remove that obstacle. US energy exports to Europe increased between 2007 and 2012 after at least 15 inefficient refineries on the continent closed. But demand in Europe has fallen so much that U.S. fuel movements across the Atlantic fell by nearly 19% in 2013 to just over 500,000 barrels a day. Despite this collapse, American refiners continue to steal market share from their European counterparts, not only in the Mediterranean and Africa, but also in major cities along the US East Coast. European refineries, which have been sending gasoline since the 1980s, have reported a 22.5 percent drop this year.
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