The first energy shock of the 21st century has most certainly been the Phoenix-like revitalization of United States energy production. An expected decline has morphed into an increase in production, turning the energy world on its heels. Previously, it was expected that the United States would not only continue to be dependent on foreign energy imports, but that those imports would increasingly dominate the economy and, to an extent, foreign policy. In fact, the turnaround has shown the United States is moving toward energy independence. Energy independence would allow one of the world's most powerful nations to operate with limited influence on foreign policy from countries who have hitherto sold it its energy.
More so, it may even allow it to undermine the resource-based economies of those nations. An aftershock is most certainly coming: liquefied natural gas (LNG). Unlike oil, which can be stored in barrels, put on vessels, and transported around the world easily, natural gas is not so portable. Natural gas pipelines are costly to maintain and can only traverse the land so far. Once the land ends, pipelines become even more difficult to develop and maintain. These limits to natural gas portability lead to closed markets and differences in gas prices around the world.
So far, most cost-effective method of transporting natural gas involves transforming it into a liquid, transporting it, and then regasifying it. In a nutshell, this is the LNG process. There are a limited number of LNG liquefaction and gasification plants in the world right now. However, an increasing number are being planned and built. In a sense, the glut in the market that is in the United States right now, has the very potential to undermine prices and energy market structures around the world. With a freer market, resource-intensive economies reliant on high-priced earth-based exports will have their influence on the foreign policy of other nations severely diminished.
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