How to Eat Russia's Oil Lunch by Ricardo Hausmann – Project Syndicate

If Russia is set to remain aggressive and dangerous, the best strategy to counter it should aim to reduce its share of the global energy market as much as possible. Assembling a coalition to do this is made easier by the shared incentive to curtail the country’s oil influence.
CAMBRIDGE – A funny thing happened on the way to net zero. While environmental, social, and governance standards were forcing oil companies to divest from fossil fuels, and while the United States was tightening its oil production policy and canceling the proposed Keystone XL pipeline on environmental grounds, Russia decided to invade Ukraine.
The US and Canada quickly declared an embargo on Russian oil, while the European Union – which is more dependent on Russian energy – struggled to devise a coherent policy. With energy prices skyrocketing, Western governments focused on increasing non-Russian supplies, including by recommissioning European coal plants and expanding US oil and natural gas production. Cynics could argue that this is an Augustinian case of “grant me chastity and continence, but not yet.” Clearly, a more radical rethink of energy geopolitics and decarbonization is necessary to confront the Russian threat.
Russia’s new aggressiveness has been enabled by its oil boom. The country’s oil production declined precipitously after the breakup of the Soviet Union in 1991, reaching a nadir of 6.1 million barrels per day in 1998 – five million fewer than a decade earlier. But output subsequently recovered completely, reaching a record 11.7 million barrels per day in 2019.
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Writing for PS since 2001
103 Commentaries

Ricardo Hausmann, a former minister of planning of Venezuela and former chief economist at the Inter-American Development Bank, is a professor at Harvard’s John F. Kennedy School of Government and Director of the Harvard Growth Lab.
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To state the obvious, oil is fungible, and gas too in the long run. Also many hydrocarbon derived commodities like fertilizer.

Also obvious, the world does not consist of just Europe, US and China. The rest of the world can and will absorb Russian output at the right price.

What Western sanctions will do, even widely coordinated ones, is simply creating an inefficient two-tiered market. The ways things go, when next conflict comes along, there could be a new villain du jour. Case in point: Venezuela, Iran.

It is clear who is eating ALL the win here, the US. What a coup de grace. For years to come, even their expensive, but “good” oil and gas are guaranteed loaded buyer.
It is also clear, who is the sucker that gets eaten up here. Who pays the dearest?
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Russian President Vladimir Putin’s invasion of Ukraine led Western governments to impose severe financial and economic sanctions aimed at weakening Russia. But what are the unprecedentedly punitive measures likely to achieve?
In the wake of Vladimir Putin’s invasion of Ukraine, no European in their right mind wants Russia to have the free cash flow that its hydrocarbon exports currently provide. And the European Union, the United States, and their allies are already on track to remove this major source of the Kremlin’s geopolitical leverage.
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