Later this year, Americans will likely hear the acronym LNG and see new tankers carrying LNG sailing into some U.S. ports. LNG is intended to save the heart and core of American civilization — to save our automotive civilization from possible rust and decay, and the Republicans from political decline.
LNG stands for “Liquefied Natural Gas,” and the tankers, coming from many parts of the world, will be carrying gas that has been liquefied at around -260F.
Natural Gas Intelligence, a weekly gas market newsletter, reports that there are 43 pending proposals for the new LNG import facilities in North America. If all are built they could supply 60 percent of existing demand in the United States and Canada. Obstacles, such as local opposition to the new terminals, will cut the number of facilities eventually built. But, experts say, only a fraction of the number of terminals are really needed.
Why the new clamor for LNG? Americans used to have one economic weapon no other country had — the dollar. Some 70 percent of all oil and gas in the world is still denominated in U.S. dollars. But, once Bush decided to wage three wars (the war on terror, Afghanistan and Iraq), the dollar started going down. The reason: bond buyers, both Americans and foreigners, began to sense that the dollar was no longer a “safe haven” for investors.
The United States has long consumed a quarter of the planet’s fossil fuels. Ever since 1970 when America started importing oil from the Middle East, the powerful dollar attracted just about all oil and gas exporters. But the dollar, just days ago, ran the risk of hurtling into a free-fall vis-a-vis the yen and the euro.
Ominously, the superhard Chinese RMB (aka Yuan) could scuttle its current dollar peg and go for “a basket of strong currencies.” The basket concept came from Robert Mundell, the 1999 Nobel prize in economics and also known as the “father of the euro.” Some years ago, Mundell suggested to the Chinese leaders to consider doing away with the dollar peg and using the “basket” instead, which could push the dollar to the brink of a free-fall.
If a dollar free-fall should take place, Americans will confront an energy crisis that will make the October 1973 oil shortage seem a mild nuisance.
In April 1973, America had experienced the first signs of an energy crisis, but the public was mesmerized by the Watergate scandal. Eventually, President Richard Nixon resigned — not only because of the Watergate scandal, but also because he was weakened when he allowed the October 1973 Yom Kippur war to break out. On October 20 the Saudis proclaimed an oil boycott against the United States. Nixon created the Federal Energy Office, which many people saw as a step towards dictatorship. (After many name changes the FEO is now part of the Homeland Security Department.)
Nixon’s Treasury Secretary George Shultz offered a solution to the looming energy crisis. He proposed that America’s entire industrial structure be eventually operated by natural gas instead of oil and coal. In the early 1970s there was enough natural gas in many states, especially California and Texas, that could go through domestic pipelines to fuel industries.
But Nixon, while agreeing with Shultz, had more grand ideas. Nixon wanted to bring the newly liquefied natural gas tankers into a small fishing Maine fishing port, Machias. The Machias folk had no desire to be guinea pigs for LNG. They feared explosions and, since most LNG tankers came from the Middle East, they worried about acts of terror. And so, no LNG tanker has entered U.S. ports during the last 32 years. When Nixon resigned in August 1974 his grand LNG design evaporated.
Now, LNG is back on the American agenda, as a result of growing political obstacles to continued U.S. access to Mideast oil, reports of the depletion of oil sources and threats to the U.S. dollar.
The man widely presumed to be leading the fight against American energy decline is Vice President Dick Cheney, Halliburton’s chief executive from 1995 to 2000. He fully knows that if America undergoes another energy crisis the Republicans, not the beleaguered Democrats, will face political decline.
In an interesting coincidence, KBR, a subsidiary of Halliburton, recently finished building the world’s largest LNG tanker, which ships gas from a port in Northern Egypt. (Egypt has become the 13th nation to export LNG.) Combined with the proposed North American LNG terminals, Halliburton’s LNG tanker-building activity may signify that Cheney’s cavalry is already preparing to come to the rescue.
Franz Schurmann (firstname.lastname@example.org), emeritus professor of history and sociology at U.C. Berkeley and the author of numerous books.