Growth in US gas output has turned supercooled fuel into a bargain commodity
That the Nord Stream 2 pipeline will increase Europe’s dependence on Russian natural gas is a geographic and arithmetical fact. But buried in the heated rhetoric — now rising to US sanction threats — over how much that matters, is just how inexpensive it would be for Europe to purchase supply diversity with liquefied natural gas from the US. Of course gas-by-ship costs more than gas-by-pipe. But at today’s prices and the spread between gas from Russia’s Gazprom and US LNG, the EU’s total annual energy import bill would rise by less than 5 per cent — or around $20 per head of population annually — by purchasing a volume of US gas equal to both the existing Nord Stream 1 and the planned second pipeline. Critically, Europe would also need to spend nothing to build LNG import terminals because the two-dozen that exist already are running, collectively, at barely one-fourth capacity. Operating all those terminals at full tilt could bring in triple the supply the Nord Stream 2 pipe will if it is ever completed.
Mark P. Mills is a senior fellow at the Manhattan Institute and a faculty fellow at Northwestern University’s McCormick School of Engineering. In 2016, he was named “Energy Writer of the Year” by the American Energy Society. Follow him on Twitter here.