Is Russia Influencing Trump’s Thoughts on Energy?
What the Republican presidential candidate’s comments about oil and natural gas say about geopolitics.
Is the Republican presidential nominee in cahoots with the Kremlin? As recently as four years ago, that would have been an absurd question. But back then, of course, the candidate in question was the eminently normal Mitt Romney. This time around, it’s Donald Trump, who recently appealed to Russia (“if you’re listening,” he added, plaintively) to commit espionage against Hillary Clinton, now the official Democratic nominee. This was such a brazenly insane thing for a presidential candidate to say that the outrage it elicited actually registered with Trump, who took to cable news yesterday to insist that he was just “being sarcastic.”
Perhaps this is Trump’s attempt to add some levity to an unusually contentious election cycle, but I’m not sure his joke was well advised. Nor was this appeal to the Russian hackers the first detail about the 2016 election that should raise concerns about whether Moscow is trying to meddle in our affairs. A number of people from various parts of the political spectrum have flagged this concern. Erick Erickson is one example; Franklin Foer is another; I’ve also noted some oddities along the way, including, back in February, with Trump’s oddly fervent defense of Vladimir Putin.
And now Trump’s recent comments have me thinking about an issue dear to Texans: the energy industry. It’s my view that any presidential candidate’s energy policy should be evaluated as not just energy policy but foreign policy. Trump’s ideas on the subject are surely music to Putin’s ears. Trump’s official plan, as described on his campaign website, is more or less boilerplate. But in the past year, he’s said two things that are strange enough on their own and troubling when taken together.
First, Trump has repeatedly called for America to “take the oil” of Middle Eastern countries, specifically Iraq, Libya, and Saudi Arabia. At the Republican debate in South Carolina, for example, he insisted—angrily and falsely—that he had been opposed to the Iraq war from day one. He then went on to claim that he had long advocated a different approach to the region: “I also said, by the way, four years ago, three years ago, attack the oil, take the wealth away, attack the oil, and keep the oil.” As with his signature policy proposal, the border wall, it remains unclear if the idea is metaphorical; Trump has certainly never explained how one would go about commandeering the oil, or how he would respond to the various objections the countries in question would inevitably raise. Still, he has been a ferocious and tireless advocate for the idea. It’s a dubious proposal, but his support for it is seemingly sincere.
The second notable comment Trump has offered on American energy policy came in May, when Robert Murray, the founder and CEO of an eponymous coal company, told attendees at the Virginia Coal and Energy Alliance about a meeting that he recently had with the candidate, at Trump’s request. According to Murray, Trump had asked him a number of questions about energy policy. One of them, Murray noted, was, “What’s LNG?”
Per the Energy Information Administration, natural gas, which can be converted to a liquefied form for storage or transport, accounted for almost 30 percent of the energy consumed in the United States last year. I suppose it’s possible that a seventy-year-old American businessman and presumptive Republican nominee for president has never heard of liquefied natural gas, or LNG as it’s called for short, but natural gas is a pretty important component of the U.S. energy portfolio. And, as you would probably know if you had read a single issue of the Wall Street Journal at any point in the past five years, America’s ongoing growth in natural gas production has been the key driver of the concurrent plunge in coal consumption.
In other words, a presidential candidate who requests a meeting with a coal executive and proceeds to ask him what LNG is, well, that’s a presidential candidate who appears to not know a thing about the energy industry and didn’t even bother to read the Wikipedia entry on “Energy in the United States.”
That Trump is such a presidential candidate puts his calls to “take the oil” of OPEC countries in an unsettling new light, especially if you consider the recent historical context. Back in December 2014, I wrote a post calling for Texans to remain calm despite the drop in oil prices. There was handwringing over the dip, so I wanted to reassure readers who feared a repeat of the eighties oil bust that the Texas economy writ large is more vulnerable to drops in oil output than drops in oil prices. I also wanted to remind readers that in the oil industry, a drop in prices doesn’t necessarily signal a drop in production. As I wrote then, “The laws of supply and demand . . . are distorted by considerations about things like geopolitics, infrastructure, financing and the physical properties of oil itself, such as the fact that it flows around underground.”
Let’s zero in on an example of how politics specifically can affect oil prices. At the time of my writing, Saudi Arabia was producing too much oil to make sense from a strictly business perspective, and thus selling its product at a loss. The country could have easily constricted production, thereby raising global oil prices. But here’s an important fact about Saudi Arabia, the largest oil-producing country in the world: it’s a kingdom with cash reserves. A Houston oilman brought that up to me back in 2014 when I asked him if I was overlooking anything about how the oil price drop would affect Texas. In other words, Saudi Arabia could afford to sell oil at a loss for a while, and so, the oilman reckoned, it would.
The country’s production levels were being driven by geopolitical concerns. So while Saudi Arabian production was making life hard for oilmen in the second-largest oil-producing country—the United States—the strategy was actually targeted at the third-biggest oil-producing country, one that has an economy that is less industrialized than ours, less diversified, an ambitious country, to be sure, but one that relies on oil revenues to balance its budget. In other words, Saudi Arabian production was messing with Russia. (Saudi Arabia continues to use this strategy.)
So I think it’s very much worth noting that Trump, who is so poorly informed about the energy industry that he literally asked a coal executive what LNG is in May, is trumpeting a bizarre proposal to “take the oil” of Saudi Arabia and its neighbors, a tricky plan that would involve various risks for the United States—but not for Russia, which would be the direct beneficiary of any success we might have on their behalf. Trump’s desire to “take the oil” may be nothing more than a coincidence. It’s hard to tell with that guy. And in all seriousness, I highly doubt he’s proposing it as a personal favor to Putin. But Trump has a number of associates—such as Paul Manafort, with extensively documented ties to Russia—and Putin himself showed us back in February that Trump is suggestible soil. Someone presumably planted this seed. And given that we have legitimate cause to ask whether that person’s concerns are aligned with those of the United States—regardless of the answer, that should be cause for concern.