The shale gas tanker JS Ineos Intuition passes under the Forth Bridge en route from the Scottish port of Grangemouth to Houston on March 2, 2022. (Ken Jack/Getty Images)

In response to Russian aggression in Ukraine, European nations have drastically reduced imports of crude oil, refined petroleum products, and natural gas from Russia. Writing in a recent Hudson policy memo, Senior Fellow Thomas Duesterberg explains how the United States can serve as a swing producer of oil and natural gas during this crisis.

Key Insights

1. Europe faces an energy crisis and has only partially replaced lost natural gas supplies.

In addition to extreme difficulties in obtaining new sources of natural gas and to a lesser extent oil, the price increases throughout Europe since the onset of the war have been of historic proportions. In the days following the invasion, natural gas prices shot up by 62 percent, and UK energy prices were up by 150 percent. The full impact of the war, along with the related need to rein in the highest inflation numbers in over 40 years, has pushed Europe into a recession that threatens households and small businesses as well as European manufacturers’ ability to remain competitive. As a result, if the region cannot quickly assemble alternative supplies, the European commitment to assist in containing Russian aggression may weaken. But since February, Europe has only had partial success in replacing the huge amounts of natural gas that either EU sanctions or Russian actions have cut off.

2. The US has the means to be a swing producer and exporter of natural gas to address the crisis.

The US will have the largest volume of liquified natural gas (LNG) export capacity in the world when new plants that are now being built and are expected to become operational in the next two years start production. In 2022, the country has already become the largest exporter of this comparatively clean fossil fuel resource, with projected exports of 114 billion cubic meters (bcm) per year. New capacity coming online between 2023 and 2025 represents more than 50 bcm of annual capacity. Total production of natural gas in the US has reached all-time records throughout 2022, facilitating increases in exports. The US is thus poised to steadily increase its exports to Europe and the rest of the world if public policy does not undermine further gains in production or infrastructure construction.

3. The US needs to do more to boost oil and gas production.

US production of crude oil and refined petroleum products remains below peak levels set prior to the pandemic. The pro-production policies of the Trump administration, as well as the de facto tolerance of the Obama years, facilitated production and export capacity growth. In contrast, the Biden administration has adopted a whole-of-government effort to discourage and prevent crude oil exploration and development, as well as the construction of infrastructure required to bring supplies to refineries, chemical plants, and export facilities. Over 25 percent of crude production in the US originates on federally owned lands. New federal leases for exploration and development on federal lands are at the lowest levels since just after World War II, partially explaining the loss of production in recent years. Crude oil production in 2022 is averaging about 1 million barrels per day (mbd) below the peak reached in late 2019. Total exports of crude oil and petroleum products declined in 2021 but grew to early 2020 levels during the summer months as prices rose and the administration depleted the national petroleum reserve to levels not seen since the 1980s. However, exports of crude and refined products to leading destinations in Europe are trending upward. The US also needs to allow more rapid permitting for new gas production and the infrastructure needed to bring it to market in order to meet the new LNG capacity and help replace Russian exports to Europe.

Quotes may be edited for clarity and length. 

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