Russian Oil and Gas
The U.S. just stopped all imports of Russian oil and
gas. All 3% that we have been
importing. Still, even this relatively small
amount constituted about 672,000 barrels per day in 2021, and at $ 130 per
barrel oil, amounts to some $87 million per day, or $32 billion per year, that
Putin won’t get from the U.S.
This sounds great, and makes us feel good, but it
is somewhat only symbolic when compared to Russian oil and gas exports to the
European Union. In 2021, the EU imported
$108 billion of Russian oil and gas.
This was at lower oil prices, say at $60/bbl. It would have been $234 billion at $130/bbl
oil.
Putin has had the EU over a barrel (sic), of the
EU’s own making. Angela Merkel’s and
Germany’s fervor to “go green”, away from fossil fuels, and away from nuclear
energy, have led most of the EU toward reliance on plentiful and relatively
cheap Russian gas and oil in the past, to fill the gap resulting from exhaustion
of the North Sea gas fields, and from the EU’s rush toward using renewables. France, being France, went to nuclear power
in a big way, and produces over 70% of its electrical power from nuclear
energy.
However, the new, tough EU is poised to follow
America, and to immediately decrease, and then phase out imports of energy
related products from Russia. The task
will be tough, however, because the EU buys 45% of its imported gas, around a
third of its oil and nearly half of its coal, from Russia. This makes the bloc
vulnerable should Russia decide to retaliate for EU policies by curbing
exports.
The civilized western world is retaliating against
Putin’s unprovoked invasion of Ukraine, a sovereign, democratically elected
country, and the predations of the brutal Russian military on Ukrainian
civilians. It seems to be much more than
the European and American propensity to talk, talk, talk, and do nothing. The civilized world is exacting crippling
penalties on Putin and on Russia.
Unfortunately, the innocent Russian people bear the brunt of these
financial, economic and societal sanctions, as private citizens always do
during wars..
Decreasing oil, gas and coal imports from Russia
will definitely harm Putin, Russia’s economy, and Russia’s ability to wage
war. But let’s not be naïve. Xi Jinping and massive China and other
outliers would just love to buy discounted Russian oil and gas. Another massive country, India, has been
silent about Russia’s aggression, and, like China, abstained in the UN Security
Council vote to condemn the Russian attack.
Others, like Pakistan, are also non-committal.
Some links on the issue of Russian energy exports
and recent events
https://www.reuters.com/markets/rates-bonds/eu-phase-out-russian-gas-oil-coal-imports-leaders-draft-2022-03-07/
https://www.cnbc.com/2022/02/24/why-europe-depends-on-russia-for-natural-gas.html
https://www.iea.org/news/how-europe-can-cut-natural-gas-imports-from-russia-significantly-within-a-year
https://www.bbc.com/news/58888451
https://www.reuters.com/business/energy/us-europeans-discussing-banning-russian-oil-imports-blinken-says-2022-03-06/
https://twitter.com/search?q=eu+energy+imports+2021&ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Esearch
Ray Gruszecki
March 8, 2022
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