The U.S. Energy Information Administration (EIA) recently released two unrelated but critical reports that point to long-term effects on the world stage.

Russia is energy vulnerable
The EIA reports that oil and natural gas exports make up 68% of Russia's total export revenues in 2013. This makes the Russian economy very dependent on energy exports. The bulk of these exports are oil, gas, and other petroleum products to Europe.

Source: U.S. Energy Information Administration, Russia Federal Customs Service

The U.S. is the world's biggest oil producer
The EIA also reported that U.S. refinery production is running at record levels, processing a record-high 16.8 million barrels per day (bbl/d) in each of the past two weeks. In addition, Bloomberg confirms that the U.S. is now the world's biggest oil producer:

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter... The country became the world's largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids. 

This, of course, is very important for the U.S. economy and for prices at the pump for U.S. consumers. Although oil (and subsequently gasoline at the pump) is priced on the world market, U.S. energy production has nevertheless been important for consumer prices. Bloomberg reports that Bank of America's Francisco Blanch, the bank's head of commodities research, stated:

The U.S. increase in supply is a very meaningful chunk of oil... The shale boom is playing a key role in the U.S. recovery. If the U.S. didn't have this energy supply, prices at the pump would be completely unaffordable.  

Influence on the world stage
There is an even broader effect to consider on the world stage, however. A U.S. that is rich in energy gives the U.S. long-term potential leverage over both the Russian economy and Russian behavior.

Russia currently plays this same leverage card in its relations with Europe and, by proxy, with the U.S., as Europe is a key ally of the U.S. As shown in the graph, the bulk of Russian energy exports are to Europe. This gives Russia a key bargaining chip, and in reality a stranglehold over the European economy and European/U.S. cooperation with Russian foreign policy. Just this last June, Russia cut gas supplies to Ukraine over lack of payment on previous debts, further escalating tension between Ukraine and Russia. BBC News noted Europe's own vulnerability at the time:

[Gazprom] said it would continue to supply gas to Europe, although Gazprom chief Alexei Miller warned there now were "significant" risks for gas transit to the EU via Ukraine.

Actual gas reductions to Europe were reported in 2007 and 2009. This fear is currently evident in Europe/Russian relations regarding the downing of Malaysia Airlines flight MH17 in Ukraine. The publication New Scientist reports on its website about how Europe recognizes its energy vulnerabilities and is reportedly taking a timid stance toward Russia regarding flight MH17:

If investigations into the attack on MH17 establish a clear link with Russian separatists in Ukraine – and Putin continues to support them – then deeper sanctions may be hard to resist and the crisis is likely to have a rapid and fundamental impact on Europe's energy landscape.

What if the U.S., with its growing supplies, could remove this dependency and deprive Russia of both its energy hold on Europe and its energy revenues?

There is certainly an existing economic incentive to export U.S. gas to Europe. The U.S. Federal Energy Regulatory Commission (FERC), in a document titled "World LNG Landed Prices 2014," reports that the price of natural gas in Europe is at least twice the price of gas in the U.S.

Until recently, LNG exports to non Free Trade Agreement (FTA) countries, which include Europe, were restricted unless there was a U.S. national interest involved. Regulatory approval is required by both the U.S. Department of Energy (DOE) and FERC to export LNG. However, the DOE announced proposed changes in May to loosen their regulatory processes and take a back seat to FERC.

In June, the publication Natural Gas Intelligence (NGI) reported that FERC commissioner Tony Clark recognized the political need for LNG exports to non-FTA countries:

He pointed to Europe, and the political events that have unfolded as a result of the impasse between Russia and Ukraine, as evidence that underscores "the economic and geopolitical potential that the U.S. has with which to offer our friends and allies an honest and predictable energy trading partner." Nowhere, Clark said, "is this possibility more evident than in the nature of the potential for the exports of liquefied natural gas. 

Although geopolitics is a tenuous business model, conditions look ripe for a new direction in U.S. energy trade that favors energy exports.

Investor perspective
Not withstanding the geopolitical value, there appears to be great potential for investors to take advantage of the world situation. It will require long-term patience, however.

In its June report, NGI stated that only seven natural gas export facility projects have DOE approval, of which three look promising for their resources and approval status. Only one, the Cheniere Energy Sabine Pass, LA project, has FERC approval to site and operate its facility. Cheniere reports that it has an existing supply pipeline, storage, and tanker docking facilities set to handle the exports. Sabine Pass is expected to export LNG by 2015, and Cheniere is planning for a Corpus Christi facility as well.

A second DOE-approved project is the ConocoPhillips partner Freeport LNG, which expects to receive FERC approval this year and immediately begin construction of its Quintana Island, TX facility. Freeport expects operations to begin in 2018, with expansion thereafter.

As for capital clout, the Gulf LNG Liquefaction Project (GLLP) in Mississippi has Kinder Morgan (through its El Paso Pipeline Partners, L.P.) and General Electric's GE Energy Financial Services behind it. In addition, KMI reports that it is sited to take advantage of already-existing supply pipeline, storage, and tanker docking facilities that are ready to handle the expected exports. Although still on the DOE's pending application list, it could move quickly once approvals are complete.

Foolish conclusion
U.S. LNG exports have the potential to change the geopolitical landscape in favor of the U.S and its allies. This could help to reign in the ambitions of countries that have had a hold over the world for decades. Of course, there is no guarantee that U.S. energy exporters will ship to Europe, as it makes sense to ship to the markets that offer the most value. However, getting U.S. energy onto the world market will offer two key advantages: the ability to manage global energy supplies to loosen existing strangleholds, and access to new markets for the U.S. to sell its products.