The bigger oil story behind the headlines

James Stafford: In terms of LNG for Europe - particularly the idea of using LNG as a weapon against Russia - what would an increase in LNG activity do to Gazprom prices in Europe? We understand that the effect would not be immediate, nor would it be drastic, but Lithuania has shown that it is a good bargaining chip.

Michael Levi: I think you have to distinguish between the first... I have this image in my head of someone trying to use a piece of spaghetti as a sword when people talk about LNG as a weapon against Russia. It doesn't go where you want to push it.

You can allow LNG exports from the United States. They're going to go to where the price is best. Right now, the price is best in Asia, and there's a reason to anticipate that will continue to be the case.

If European buyers want to pay extra to get LNG from the United States rather than from Russia then maybe you'll see flows moving into Europe. I don't see a significant appetite for that yet. That's why we're not seeing European contracts, not because of US regulations. US regulations haven't gotten in the way of Asian contracts.

What's in the way of European contracts is a lack of commercial attractiveness. What US LNG exports can do is push down the overall price of natural gas. Even if US exports go to Asia, if that displaces other gas to flow from Europe, it can push down prices that improve European competitiveness.

It doesn't change the ability of Russia to use gas as a weapon. The ability to use gas as a weapon has to do with the ability to cut off physical flows during a crisis. It's important to distinguish that from long-term competitiveness issues.

It's inevitable that Europeans will describe their desire for greater US exports in terms of energy security. It's much more compelling to talk to American audiences about solidarity in the face of Russian threats than it is to say, 'we want you to do this because our chemicals producers will become more competitive as a result.' But, the reality is that the main impact of US LNG exports in Europe would be on competitiveness rather than on security.

Michael Levi: For Ukraine to be more energy secure it needs to have industry that can be profitable without subsidized Russian gas.

That's the basic problem here, right? All Russia has to do is threaten to charge Ukraine the same as everyone else would charge Ukraine, and Ukraine is in trouble.

Everyone worries about countries cranking up prices to above the market price. That usually corrects itself pretty quickly.

The real risks, as Ukraine illustrates, tend to come when a country sells energy below the market price and then threatens to sell it at the same price that everyone else does. There's nowhere to run when that happens. When you're in that situation, your [energy] security is very low.

You saw that with the Soviet Union and Cuba. You see it with Russia and some of the former Soviet states.