US fracking threatens Russia’s energy dominance

The ongoing "shale revolution" in U.S. oil and gas production could prompt Russian President Vladimir Putin to institute economic and political reforms that would ultimately undermine his regime, experts say.

Putin largely relied on oil and gas production to fuel economic expansion during his first two presidential terms from 2000 to 2008. Hydrocarbons accounted for half of Russia's GDP growth since 2000, according to a May report by Leon Aron, resident scholar and director of Russian studies at the American Enterprise Institute.

Russia is one of the two largest oil producers in the world, responsible for 12 percent of global oil output, and the world's leader in natural gas production, accounting for 20 percent of global gas output.

However, there are signs that Russia's energy dominance is increasingly vulnerable.

Russian energy giant Gazprom has lost more than $280 billion in market value since 2008. Experts on the country's economy and governance attribute the decline to U.S. investment in the innovative oil and gas extraction technique of hydraulic fracturing, or "fracking," which dampened U.S. demand for imports and exerted downward pressure on global gas prices and Gazprom's profits.

Russia's overall economic growth slumped to just 1.2 percent in the second quarter, significantly lower than the economic ministry's forecast of 1.9 percent.

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