Tim Boersma and I have a new working paper on energy diplomacy published by Columbia University’s Center on Global Energy Policy. It is available here.
The oil and gas boom has turned the US energy landscape upside down, with ripple effects around the world. This transformation has given rise to discussions of how Washington can leverage these newly found riches to its advantage internationally. The emerging literature in this field seems to agree that major benefits accrue to those nations that produce massive amounts of hydrocarbons but too often misses a clearly defined starting point for analysis, for instance regarding the division of labor between public and private actors.
The Obama administration was the first to have this “tool” in its diplomatic toolbox and made repetitive claims about how American resources were going to be used to help allies in, for instance, Europe. The transition to the Trump administration brought with it numerous policy changes, including on the diplomatic front, though the mantra to “unleash” US resources into the world has suggested continuity, rather than change, absent the tone of diplomacy.
This paper examines the history of US energy diplomacy and how it has been altered by the US oil and gas boom. It then explores the limitations of US energy diplomacy and provides a case study to illustrate areas where it has come up short and areas where it has found success. In short, the paper finds the following:
- While discussions around US energy diplomacy have oftentimes been framed around the benefits US energy exports can bring to allies and to pushing back against foes, there seems to be very little evidence that supports the notion that diplomats can exert this kind of influence.
- Diplomatic objectives are often overwhelmed by energy market realities. The US oil and gas sector consists of thousands of companies of vastly different sizes, making independent investment decisions based on commodity price expectations—not on diplomatic desires.
- Whether and when energy resources are sold is determined by a number of factors, including available infrastructure and existing regulatory frameworks, but the chief factor is price. If making a profit is the key objective of US companies, and their actions are independent, it can be no surprise that there are substantial limits to how the US diplomatic corps can steer the flow of commodity to achieve desired political goals.
- In specific cases where US diplomats have tried to persuade importing allies to diversify their fuel mix, such as natural gas in Europe, that mix has not materially changed. European efforts to increase optionality for various member states have generated meaningful results, even though it is more complicated to declare that an American diplomatic success.
- It is important to consider energy as just one topic in a broader diplomatic playbook, contrary to what a phrase like “energy diplomacy” may suggest.
- Our analysis suggests further study to better comprehend the merits of and limitations to US energy diplomacy is likely valuable but that achieving desired outcomes can be difficult and that its promise to the broader public therefore must be modest.