On Putin and Energy

John McCain once said that Russia is an old gas station masquerading as a country.

It’s interesting to look at the relationship between Crude oil prices and Putin’s aggressive adventures. Over the last 10 years the crude oil price has averaged about $ 65 per barrel. But look at  this:

• Sep 2008:   Russian-Georgian war           Oil Price $148
• Mar 2011: Russia enters Syria                 Oil price $134
• Feb 2014:   Russia annexes Crimea          Oil price $122
• Feb 2022:   Russia invades Ukraine          Oil price $98

The Russian economy is about half that of California and it is dependent on oil for about 40% of its GDP and 60% of its exports. It seems that high oil prices is the great enabler of Putin’s misadventures. The way to truly weaken Putin so that, notwithstanding his druthers, he will not have the capability to wage war is through the hydrocarbon market. Bringing the price of oil way down is a lot more effective than any sanctions we dream up. 

In December 2018, after 75 years of dependance on oil imports, the U.S. finally became a net exporter of petroleum. But that has now changed again. The Energy Information Agency (EIA) forecasts petroleum imports in 2022 to rise to 3.9 million barrels per day. That surely helps Putin. And here’s the irony: In 2021 we imported from Russia over 600,000 BPD of crude and other petroleum products.

We are rightly concerned about global warming and climate change. It’s real and we must do all we can to reduce all greenhouse gases, but at the same time we have to be cognizant of our dependence on fossil fuels for some time yet. Realistically, it will take a lot of time to transition to a carbon neutral economy. We do not have the infrastructure in place today and no rational person agrees to shut down our economy for that end. We need to take all steps we can to maximize alternative energies, improve energy efficiency and clean up our operations, but at the same time we certainly do not want to go back to the era when we relied on imports from unstable places for our domestic needs – – – for anything. Developing our own resources to meet our domestic petroleum needs is essential, and growing our export potential boosts our economy and helps our friends – – – and may well keep the likes of Putin in check. Cancelling the Keystone pipeline, stymieing LNG export facilities and cancelling new oil leases on U.S. soil was a feel-good exercise but was not then, and is not now, in our national interest. But Putin is happy.

• – – – Just the view of a common man