Having your cake and eating it, too, is, I’ve heard, a difficult thing to do. The same appears to be the case with having your oil and using it, too. The European Union has been struggling to convince all member states that they need to stop buying Russian oil because Ukraine. It quickly became clear this is easier said than done because, what a shocking surprise, Europe may be Russia’s biggest oil export market but Russia is, in turn, Europe’s biggest oil supplier.
Spot on blog Irana. I just do not understand how politicians willfully screw their own population. I think the Democrats in the USA are in big trouble this voting cycle over this. Of course the Republicans are no better and are voting along with the dems on aid and more sanctions on Russia. But the Dems are currently in power.
At the onset of these sanctions I just could not fathom the EU going along with the US sanction scheme and well when it came to energy they did not and behind the scenes, Brussels had to back off or look stupid or worse the EU may well have dissolved over energy. Honestly Germany, France and Italy look a tad stupid and well t he countries that got cut off ar4e probably pissed being the first to sacrifice their populations to the sanction altar.
How dare Russia wanting money they can actually use as opposed to Euros or Dollars. They are blackmailing the west LOL, please. What is also loony is war crimes for Russia but not the Wests' decades of wars in the Middle East.
Food riots already breaking out in the poor countries all over sanctions, we are truly being seen as evil. Russia has not destroyed silos or planted fields because of this.
I've always wondered why Mario Draghi with his banking credentials, or anyone with a smattering of economics knowledge, didn't propose the simplest way to deny oil & gas revenues from Russia. In my view, it would be the complete lifting of any restrictions, including the reopening of Nord Stream 2. I know, I know, it is un-PC and Ukraine...but hear me out. Once the market is flooded with Russian fossil fuels, prices can only go one way - down. The EU would still get the same amount it needs but would pay half or less for it.
Because what happens now has the exact opposite effect - Russian fossil fuel revenues are sky-high: "Despite missing production targets and selling barrels at a discount, the recent surge in crude prices pushed Moscow's oil and gas revenue to 1.81 trillion roubles ($27.92 billion) in April, compared to a total 2.97 trillion roubles for the first three months of the year". And this will continue as the gas/oil markets are under pressure, which is currently foreseen until Q2 2023 at least.
Draghi strikes again! If they try to cap the price, then that means rationing is coming. I guess it is time to start bribing your elected representatives to make sure you are on the list of those who get to heat their houses next winter.
Yes, but they wouldn't be in this situation if they hadn't spent the last 20 years cutting themselves off at the knees with utterly delusional energy policies....
They were warned, but were sure they were too smart to listen.
The calculations of who needs who more are really quite simple. Say Russia sells a barrel of oil for $100 and it costs $45 to produce. Russia gains around $55 of value per barrel of oil sold to Europe. A barrel of oil contains the energy equivalent of around 4.5 years of human labour. Minimum wage in Germany is 1484 Euros per month. Therefore Germany gains around 80,106 Euros of value for each barrel of oil purchased. (Basically Europe needs the oil over 1000 times more than Russia needs to sell it).
Great article, Irina. Sanctions are meant to hurt Russian but is also hurting the EU. EU politicians should realize that this time whole economies are suffering.
The EUs REpowerEU plan to move away quickly from Russian energy sounds like a plan on steroids and is purely political.
Because more than just having a plan you want to implement, you still need to think of how best to execute that plan so as to give you some amount of leverage and benefits in the long term.
Great article! You and i have talked about sanctions only hurt the consumers and the little guy. You nailed it again.
Spot on blog Irana. I just do not understand how politicians willfully screw their own population. I think the Democrats in the USA are in big trouble this voting cycle over this. Of course the Republicans are no better and are voting along with the dems on aid and more sanctions on Russia. But the Dems are currently in power.
At the onset of these sanctions I just could not fathom the EU going along with the US sanction scheme and well when it came to energy they did not and behind the scenes, Brussels had to back off or look stupid or worse the EU may well have dissolved over energy. Honestly Germany, France and Italy look a tad stupid and well t he countries that got cut off ar4e probably pissed being the first to sacrifice their populations to the sanction altar.
How dare Russia wanting money they can actually use as opposed to Euros or Dollars. They are blackmailing the west LOL, please. What is also loony is war crimes for Russia but not the Wests' decades of wars in the Middle East.
Food riots already breaking out in the poor countries all over sanctions, we are truly being seen as evil. Russia has not destroyed silos or planted fields because of this.
I've always wondered why Mario Draghi with his banking credentials, or anyone with a smattering of economics knowledge, didn't propose the simplest way to deny oil & gas revenues from Russia. In my view, it would be the complete lifting of any restrictions, including the reopening of Nord Stream 2. I know, I know, it is un-PC and Ukraine...but hear me out. Once the market is flooded with Russian fossil fuels, prices can only go one way - down. The EU would still get the same amount it needs but would pay half or less for it.
Because what happens now has the exact opposite effect - Russian fossil fuel revenues are sky-high: "Despite missing production targets and selling barrels at a discount, the recent surge in crude prices pushed Moscow's oil and gas revenue to 1.81 trillion roubles ($27.92 billion) in April, compared to a total 2.97 trillion roubles for the first three months of the year". And this will continue as the gas/oil markets are under pressure, which is currently foreseen until Q2 2023 at least.
But, as you said, what do I know?
I like the opinion piece.
Draghi strikes again! If they try to cap the price, then that means rationing is coming. I guess it is time to start bribing your elected representatives to make sure you are on the list of those who get to heat their houses next winter.
"shooting themselves in the foot."
Yes, but they wouldn't be in this situation if they hadn't spent the last 20 years cutting themselves off at the knees with utterly delusional energy policies....
They were warned, but were sure they were too smart to listen.
The calculations of who needs who more are really quite simple. Say Russia sells a barrel of oil for $100 and it costs $45 to produce. Russia gains around $55 of value per barrel of oil sold to Europe. A barrel of oil contains the energy equivalent of around 4.5 years of human labour. Minimum wage in Germany is 1484 Euros per month. Therefore Germany gains around 80,106 Euros of value for each barrel of oil purchased. (Basically Europe needs the oil over 1000 times more than Russia needs to sell it).
Great article, Irina. Sanctions are meant to hurt Russian but is also hurting the EU. EU politicians should realize that this time whole economies are suffering.
The EUs REpowerEU plan to move away quickly from Russian energy sounds like a plan on steroids and is purely political.
Because more than just having a plan you want to implement, you still need to think of how best to execute that plan so as to give you some amount of leverage and benefits in the long term.