Market share is hard won. Since it is, those who have it are unlikely to purposely give it up.
The above statement of the obvious is a good jumping off point with energy top of mind. To this day, a silly myth persists that when Arab members of OPEC “embargoed” the U.S. in 1973, they stopped selling oil to the U.S. They did no such thing, and they knew they did no such thing. The U.S. continued to import “Arab oil” much as it had pre-embargo, only we purchased the “Arab oil” from those the Arab OPEC members were selling to. There’s no accounting for the final destination of any good, which is why the Arab embargo was always symbolic. The very notion that any producer of anything would give up the U.S. market…No, never.
What was true in 1973 was similarly true in 2022 when Russia invaded Ukraine. Pundits and analysts who should have known better wrung their hands about a potentially “cold winter in Europe” thanks to Russia possibly ceasing sales of oil & natural gas to the rest of Europe. The fears expressed were never serious, rooted as they were in the ludicrous notion that Russia was going to give up a huge market. Not likely.
Better yet, what was unlikely will increasingly be rendered impossible by progress. To see why, it’s worth remembering that ten years ago the market for liquid natural gas was still largely a local one. What powered so much wasn’t realistically transportable, or store-able once transported.
It all speaks to the beauty of price signals. With the markets for natural gas once again local, so were prices. Which meant there would be handsome profits for the natural gas producers capable of globalizing their distribution. Thankfully, that’s what’s happening now. As Venture Global Co-Chairman Robert Pender recently reported at a Hamm Institute for American Energy conference, globally transported liquid natural gas (LNG) is now cost-competitive with locally extracted coal.
The meaning of Pender’s assertion is fairly profound. Looked at through the prism of living standards and cost of living, a globalized LNG market has the potential to power, heat, and cool the world quite a bit more cheaply now, and in the future. The bet here is that this development will happily reveal itself in the form of “climate mastery” (Alex Epstein) for parts of the world where summers are still so dreadful. Luxuries are historical in nature, which means it will soon enough be true that air conditioning comfort will be common in poor parts of the world in the way that once obscure mobile phones presently are. Progress is beautiful.
Another benefit of globalized LNG markets will be the quieting of country autocrats who merely threaten to cut off the flow commodities, along with the pundits who have a naïve tendency to believe their threats. The globalization of yet another energy source has the potential to wholly change the subject on the matter.
While foreign policy pundits can continue to debate the Russia/Ukraine story, what will no longer rate even unreasonable debate will be the energy question. No matter what happens, oil and natural gas will flow to where there’s production. The world will be better off and safer thanks to this truth.