2022 World Cup and LNG Exports to Drop Qatar Funds for Extremists

Two aspects of booming shale oil and gas production across the U.S.. First, increased domestic production reduces the importance of oil from the Middle East. The Carter Doctrine and later U.S./Middle East policies were based on the view that protecting Middle East oil exports to the U.S. justified U.S. bases, interventions, and military expenditures there.

Second, U.S. oil and gas exports could play a role is reducing prices and particularly in cutting revenue to Qatar, a major funder of various radical Islamist organizations. The New York Times reports on Qatar’s support on various Middle East conflicts: “Qatar’s Support of Islamists Alienates Allies Near and Far” (September 7, 2014). Qatar is also: “where the United States has its largest military base in the Middle East.” (I don’t know if Islamist organizations operating and raising money in Qatar is somehow seen by the monarchy as balance for hosting the U.S. military base.)

Asian and western consumption of oil and gas sends billions dollars and Euros each year to Saudi Arabia, Qatar, and other Arab producers. Some of these funds find their way to support modern Islamists claiming to teach “pure” Wahhabi or other “early Muslim” versions of Islam around the world. And some of these oil and gas income is channeled by Qatar and others to support violent Islamic organizations.

But Qatar has a few speed-bump coming down the road for its funding of Islamist causes and organizations. In Bloomberg, “A Little Less Rich: Qatar Gas Dominance Challenged” (April 1, 2014), these problems are outlined. Qatar’s massive gas reserves and Liquefied Natural Gas (LNG) infrastructure are a major source of revenue but new competition is coming:

The greatest threat to Qatar’s enormous wealth is competition. Other nations are challenging its LNG dominance. Australia is constructing liquefaction plants that will more than triple its annual LNG-manufacturing capacity to 85 million tons by 2018…

Qatar could take a hit not only from Australian production, but also from fast-expanding Shale gas production in the U.S.. Again, from the Bloomberg article:

 Taking advantage of new production from hydraulic fracturing, U.S. companies such as Houston-based Cheniere Energy Inc. (LNG) and ConocoPhillips; Richmond, Virginia–based Dominion Resources Inc.; and San Diego–based Sempra Energy (SRE) have sought U.S. Energy Department approval for 37 LNG export projects.

However, only two gas LNG export projects have so far been approved by the U.S. government. Some petrochemical companies, Dow Chemical, for example, have been lobbying to block gas exports as a way to keep domestic prices lower. Dow and other companies use natural gas for power as well as a feedstock for various chemicals. See 2013 article “The Case Against Natural Gas Exports” for more.

Meanwhile, with natural gas prices low in the U.S., and efforts to export gas to Europe and Asia blocked or delayed, firms have been slow to invest in gas pipelines to transport gas from Eagle Ford and other shale deposits. So instead, much of the natural gas is just flared.

U.S. Middle East policy could be shifted to reduce spending on military bases in Qatar and elsewhere in the Middle East, and instead to provide federal approval for U.S. firms eager to export oil and gas to world markets. The first would recognize that securing oil and gas exports from the Middle East should no longer be a U.S. military mission. The second would recognize that approving federal permits for exporting oil and gas generates jobs and revenue for U.S. firms, provides Europe and Asia with more stable natural gas support, helps lower prices, and reduces excess revenue to Qatar and other Middle East governments supporting disruptive Islamist groups.

(And on the other side, the “Case Against Natural Gas” article linked above claims more net jobs would be created by banning gas exports in the hope that natural gas exploration and production would stay strong and prices stay lower than in other countries.)

The other challenge for Qatar noted in the Bloomberg article:

Qatar faces diminished market share and the possibility of lower prices just as the country embarks on $200 billion of infrastructure spending before hosting the 2022 soccer World Cup.