Biden Could Solve the Gas Crisis Today by Taking Sanctions Off Russian Oil
by John Lawrence
Sanctions on Russian oil have been an abysmal failure. Russian oil profits are up 50% from last year! Just as American and British oil corporations have been scoring record profits, so has Russia. Oil prices are set on the world market and soaring prices result in record profits for Russia. If Putin had designed the sanctions himself, he couldn't have wreaked more havoc on the US and European economies. It's time for Biden to admit that his policy of sancti0ns against Russia has failed. They haven't deterred Russia from pursuing a war of attrition against Ukraine. They have demonstrated the abject failure of using US sanctions to control the actions of other countries. They are a total lost cause now and in the future. That's the lesson of the war in Ukraine for the west.
Bloomberg reported:
Russia’s oil revenues are up 50% this year even as trade restrictions following the invasion of Ukraine spurred many refiners to shun its supplies, the International Energy Agency said.
Moscow earned roughly $20 billion each month in 2022 from combined sales of crude and products amounting to about 8 million barrels a day, the Paris-based IEA said in its monthly market report.
Russian shipments have continued to flow even as the European Union edges towards an import ban, and international oil majors such as Shell Plc and TotalEnergies SE pledge to cease purchases. Asia has remained a keen customer, with China and India picking up cargoes no longer wanted in Europe.
The IEA, which advises major economies, kept its outlook for world oil markets largely unchanged in the report. Global fuel markets are tight and may face further strain in the months ahead as Chinese demand rebounds following a spate of new Covid lockdowns, it said.
Reduced flows of Russian refined products such as diesel, fuel oil and naphtha have aggravated tightness in global markets, the agency noted. Stockpiles have declined for seven consecutive quarters, with reserves of so-called middle distillates at their lowest since 2008.
But for all the disruption, Moscow has continued to enjoy a financial windfall compared with the first four months of 2021. Despite the EU’s public censure of the Kremlin’s aggression, total oil export revenues were up 50% this year.
The bloc remained the largest market for Russian exports in April, taking 43% of the country’s exports, the IEA said.
So where is this "world market" that is setting the price of oil? Is it on Wall Street? I'd like to have a word with whoever is in charge of this "world market." Lord knows the US produces enough oil to supply all the US' gas needs so why not take US oil production off the world market and just sell it to the American people at a reasonable price? Oh, I guess that's not how capitalism works. Ironic, isn't it, that a formerly communist country like Russia is now profiting from capitalist markets! So even if the US, Canada and Europe are having record inflation with recessions predicted in the near future, Biden won't take the sanctions off of Russian oil, and basically this is all for spite, all because he hates Putin so much. Biden has staked American prestige on fighting a proxy war with Russia based on the almighty dollar and the power it supposedly possesses over every financial transaction going on in the world. Problem is that all the sanctions on Russia have only proven the weakness and futility of using sanctions to achieve policy goals. Russia has demonstrated that the sanctions just don't work. They haven't deterred Russia in the least. China and India have taken up the slack in Russian oil purchases.
Besides that, what Biden fails to understand is that like the US, Russia's currency, the ruble, is a fiat currency. That means that unlike China, it is not pegged to the US dollar. Russia's central bank can print as many rubles as it wants without asking US permission. The US can of course do the same thing - print as many dollars as it wants except the limiting factor is inflation. So the US can't print dollars right now, but Russia can still print rubles. That means that Russia controls Russian investment in Russia and Russian control of internal consumer markets. Imported products come mainly from China, and China is Russia's friend. Russia is demanding payment for its gas in rubles rather than dollars, and this supports the value of the ruble as a convertible currency just as Nixon's demand that the Saudis price their oil in dollars supported the value of the dollar and made the dollar the world's reserve currency.
All this boils down to the fact that Russia is in the driver's seat with respect to the war in Ukraine. It's hard to see how the unending supply of western weapons is sufficient to win the war for Ukraine now that the policy of sanctions has failed. Demonizing Putin is not a policy that is likely to have an effect on the war one way or other. Putin still has a lot of friends in the world and US inflation, while being primarily a function of sanctions on Russian oil, is also dependent on the supply chain of products coming from China, Russia's friend. Biden should be careful about whom he demonizes. After demonizing MBS, he's now about to get back in bed with him and the Saudis. Biden's Build Back Better policy could have helped the American people, and even now could fight inflation, but alas, after promising that it would be passed "in tandem" with the bipartisan infrastructure bill, it never was. What up with that?