The Fuse

Clinton’s Energy Security Philosophy, Explained

by Matt Piotrowski | August 18, 2016

Energy still has not been a major focus in the 2016 presidential campaign. The issue has taken a backseat to the economy, terrorism, immigration, and the candidates’ personalities. Over the course of the primaries and the general election, the main difference that emerged between Democratic nominee Hillary Clinton and Republican candidate Donald Trump on energy was regarding hydraulic fracturing. Clinton wants to impose limits on the technology, while Trump wants unfettered access to public lands for the industry. Their main area of agreement is on transportation infrastructure, with both sides wanting to boost spending in this space in order to increase employment and make investments for long-needed fixes.

With energy receiving so little attention and Clinton now commanding strong leads in national polls, it’s worth looking back at her comments and actions as Senator and Secretary of State to dissect her views on energy. To be sure, she would likely expand on President Obama’s climate policies, which may include increased regulation of the fossil fuel industries, more support for alternatives such as wind and solar, and staying the course on fuel efficiency standards. The specifics are murky at this point, and may include a fuel tax and increased methane regulations, among other measures, but what’s achievable largely depends on the make-up of Congress and the overall political environment at the time, not to mention policies at the state level.

“Energy cuts across the entirety of U.S. foreign policy. It’s a matter of national security and global stability. It’s at the heart of the global economy. It’s also an issue of democracy and human rights.”

Regarding energy security in general, Clinton has articulated her philosophy in speeches which may serve as a guide to energy security priorities and foreign policy should she win the election. One major speech, at Georgetown University in late 2012, shows her drawing the connection between energy and many other critical issues. “Energy cuts across the entirety of U.S. foreign policy,” Clinton stated. “It’s a matter of national security and global stability. It’s at the heart of the global economy. It’s also an issue of democracy and human rights.”

Her entire speech centered around the intersection of energy and geopolitics, noting that global stability depends on security of supply. “Energy…rests at the core of geopolitics, because fundamentally, energy is an issue of wealth and power, which means it can be both a source of conflict and cooperation,” she said.

Clinton stressed one major shift that has occurred in the last decade or so—the convergence of interests for both consuming and producing countries. “Countries that once weren’t major consumers are,” she said. “Countries that used to depend on others for their energy are now producers.”

The U.S. is a perfect example in this regard. While it has kept its spot as the world’s top oil consumer, it is now among the top three producers because of shale, a stark turnaround after seeing output decline continuously for three decades. On the flip side, major oil countries in the Middle East are now seeing strong demand growth and having to use more of their own production for domestic purposes.

Energy interdependence needed

“Outside of the domestic debate, the important thing to keep in mind is our country is not and cannot be an island when it comes to energy markets.”

The U.S. has distinctive interest in working to solve global crises surrounding energy in order to keep countries from using their resources or geographic advantage “to force others to bend to their will or forgive their bad behavior.”

Two main examples of countries that abuse their power include Russia and Iran. Europe’s dependence on Russian gas has given Moscow leverage over the continent, while Iran has a number of times over the years threatened to cut off oil supplies moving through the Strait of Hormuz, the market’s largest chokepoint, causing jitters among traders and consuming nations.

Clinton also reiterated how meeting environmental goals can spur alternative energy sources and promote new technology, ultimately bringing about diversity of supply sources—a key goal in achieving energy security. She pointed to the importance of energy for economic growth and political stability. The U.S. cannot be isolationist when it comes to energy, Clinton said, instead stressing the importance of interdependence. Energy independence has been a stated goal of presidents going back to Richard Nixon in the 1970s, but security of supply and economic strength are necessary for U.S.’ allies, too, in order to achieve foreign policy goals.

“Outside of the domestic debate, the important thing to keep in mind is our country is not and cannot be an island when it comes to energy markets,” Clinton stated. “Oil markets are global and natural gas markets are moving in that direction.”

One important development in this area was the lifting of the ban on U.S. crude exports, which occurred in December of last year, three years after Clinton’s speech. As of the latest data, the U.S. is now sending crude to some 17 different countries since the ban was overturned. Many deals have occurred on a sporadic basis, but they show how the U.S.—through interdependence—can diversify the supply base for U.S. allies and lessen their reliance on unstable producers such as Russia and those in OPEC. In a similar vein, the U.S. is also exporting liquefied natural gas (LNG) thanks to policy changes and is poised to become a major player in the gas market as it grows globally.

Energy diplomacy to achieve geopolitical goals

“Anywhere in the world, when one nation is overly dependent on another for its energy, that can jeopardize its political and economic independence.”

A major portion of her Georgetown speech was dedicated to energy diplomacy being an important tool to boost healthy competition in the global energy sphere and keep monopolies from taking shape. “Anywhere in the world, when one nation is overly dependent on another for its energy, that can jeopardize its political and economic independence,” she said.

One example of energy diplomacy is how Washington has been a partner in helping Europe build the proper pipeline infrastructure in order to lessen reliance on Russian gas. Another illustration she highlighted was the EU embargo against Iranian oil (which began several months before her talk at Georgetown) in order to bring Tehran to the negotiating table to curb the country’s nuclear ambitions. To the chagrin of her liberal supporters, Clinton, while at the State Department, launched the Global Shale Gas Initiative to support hydraulic fracturing in other countries. This stands in contrast to her message during the Democratic primaries calling on limiting fracking domestically, but it’s another example of helping allies improve diversity of supply.

Taking on OPEC?

Although Clinton talked about the importance of competition in energy markets and the need for interdependence, she failed to mention OPEC’s market power in her Georgetown speech and hasn’t brought up the cartel on today’s campaign trail. That is likely the result of low gasoline prices, which have taken the issue of oil dependence out of the public’s focus. During the 2008 campaign, when she ultimately lost the primary to Obama, she took on OPEC in speeches as oil prices were climbing to their all-time highs that summer.

“We’re going to go right at OPEC,” she said at a rally in Indiana. “They can no longer be a cartel, a monopoly that gets together once every couple of months in some conference room in some plush place in the world, they decide how much oil they’re going to produce and what price they’re going to put it at.”

The U.S., as Clinton pointed out in her speech at Georgetown in 2013, has made monumental energy security gains this decade. They need to continue.

She continued: “That’s not a market. That’s a monopoly.” She said she’d use anti-trust law and the World Trade Organization (WTO) to break up OPEC.

What’s her appetite for taking on OPEC if she wins in November? It’s unclear. With prices low and the group pumping at record levels, the political will may not be there. But given the current Saudi strategy of choking off non-OPEC supply, particularly U.S. shale, to gain more market share, Clinton ought to keep a close eye on OPEC developments and avoid complacency although the oil market conditions are the complete opposite of 2008 and even 2012, when she gave her talk at Georgetown. The U.S., as Clinton pointed out in her speech, has made monumental energy security gains this decade. They need to continue.

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