Editorial Board Archives

Wall Street Journal | Editorial Board | July 11, 2018

President Trump is so prone to rhetorical excess that he sometimes hurts his own case even when he’s right. A case in point is his shellacking of Germany Wednesday for supporting a new Russian gas pipeline.

“Well, I have to say, I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia,” Mr. Trump said during a breakfast with NATO Secretary General Jens Stoltenberg.

“And the former Chancellor of Germany is the head of the pipeline company that’s supplying the gas. . . . So you tell me, is that appropriate? [B]ecause I think it’s not, and I think it’s a very bad thing for NATO and I don’t think it should have happened. And I think we have to talk to Germany about it.”

While he then went over the top in saying “Germany is totally controlled by Russia,” Mr. Trump’s rant is an accurate summary of Berlin’s role in the Nord Stream 2 project. The pipeline would link Russia and Germany via the Baltic Sea, doubling the capacity of the existing pipeline in that corridor, and bypassing other pipelines through Ukraine and central and eastern Europe.

The Kremlin hopes to increase the dependence of Germany and Western Europe on Russian gas while depriving Ukraine and other inconvenient states of the transit fees Russia must pay to use current pipelines. Moscow could then also shut off the gas at will to states Russia still considers its satellites.

The embarrassment for Berlin and NATO is that Germany is happy to help Vladimir Putin execute this plan. Usually hostages need to be taken instead of volunteering. Yet Gerhard Schröder, the former Chancellor Mr. Trump mentioned, is cashing in on his lobbying prowess to ease the project through Berlin as chairman of the Nord Stream 2 consortium and chairman of Russian energy giant Rosneft.

Full op-ed here

Wall Street Journal | Editorial Board | February 1, 2018

Readers of pre-millennial vintage may recall the 2008 presidential campaign when Republicans and especially Sarah Palin picked up the chant “drill, baby, drill” as a response to soaring oil prices. The theme was much derided, not least by Barack Obama, who as late as 2012 called it “a slogan, a gimmick, and a bumper sticker” but “not a strategy.” Ten years later, who was right?

The U.S. Energy Information Administration (EIA) reported Thursday that U.S. crude oil production exceeded 10 million barrels a day for the first time since 1970. That’s double the five million barrels produced in 2008, thanks to the boom in, well, drilling, baby.

The EIA summary puts it this way: “U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tighter rock formations including shale and other fine-grained rock using horizontal drilling and hydraulic fracturing to improve efficiency.” This is the “fracking” boom our readers know well that has been driven by innovation in the private oil and gas industry.

The magnitude of the boom is remarkable. The gusher has pushed the U.S. close to overtaking Saudi Arabia and Russia as the world’s leading oil producer. In 2006 the U.S. imported 12.9 million barrels a day of crude and petroleum products. By last October that was down to 2.5 million a day. Some gimmick.

This translates into greater energy security as the U.S. is less dependent on foreign oil sources. Donald Trump calls it “energy dominance,” which implies that the U.S. wants to husband its supplies like gold at Fort Knox. The reality is we want to produce and sell what the market will bear, including exports to willing buyers around the world.

Thanks to Congress’s deal with Mr. Obama in 2015 when Republicans extended wind and solar subsidies in return for lifting the oil export ban, the U.S. exported some 1.5 million barrels of oil a day in November. Some readers may recall that Heritage Action instructed Congress to vote no, and Breitbart called the bill “a total and complete sell-out of the American people.” Perhaps even they can now see that trading temporary subsidies for a permanent change in export law was shrewd and good for the country.

Also striking is how quickly the oil and gas industry has recovered from the oil price plunge of 2015-2016. Previous price declines led to multiple bankruptcies and bank failures. This time drillers adapted quickly, took the rig count down fast, and cut costs. America’s flexible private capital markets helped the companies ride out the price trough, and now producers, investors and lenders are reaping the benefits of the oil price rebound to $69 a barrel.

And don’t forget the fracking boom in natural gas. EIA says U.S. gas production increased by some 50% from January 2010 to November 2017, reducing carbon emissions and heating prices. Thanks to new export terminals, the U.S. is now selling liquefied natural gas around the world. This has the potential to compete with Russian gas so Western Europe doesn’t have to succumb to Vladimir Putin’s periodic energy blackmail. Unleashing U.S. energy is Donald Trump’s best Russia containment strategy.

Read the full editorial here.

Trump and the Russia Pipeline

Drilled, Baby, Drilled