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The Fastest Way Out of Ukraine is Via Pipeline

Cars on roads clogged with refugees crawl at a snail’s pace across the Ukraine border into Poland and Slovakia.  Moving past them at a faster pace are barrels of oil flowing through the Druzhba pipeline on their way to central Europe.  Meanwhile, the West has imposed an assortment of economic sanctions on Russia and has stopped the flow of finances into and out of Russia from multiple sources.  But there is one thing we haven’t stopped – the flow of oil and gas.  In fact, it hasn’t slowed a bit.

Why?  We need it too much.  Europe imports something like 2.5 million barrels per day of oil from Russia, and now that Russia has started a war and raised the price of oil even more, this adds up to $250 million per day of cash flowing in the opposite direction of the refugees.  PER DAY.  And that’s revenue just from oil.  Imagine if that much money was flowing from Europe to Russia for something that was merely cool (such as soccer games) but not important.

How did we end up here?  Pick a few from the list below:

  • We oppose oil production on our soil but embrace it on other people’s soil
  • We oppose pipelines from Canada to the US but not from Russia to Germany
  • We think that reducing domestic production will reduce domestic consumption
  • We have adopted California’s energy policy on a massive scale

Germans (the vast majority of whom oppose fracing and more recently, nuclear power) are among the most reliant on Russian energy.  It should be noted that the startup of NordStream 2 is on hold.  Great.  What no one seems to be talking about is the fact that NordStream 1 (identical to NordStream 2) is still operating.  Dang it.

But in all fairness, it is the United States who would likely suffer economically the most even though we don’t directly import much oil and gas from Russia.  The reason is that an increase in oil prices affects us in a disproportionate manner because of how much energy we consume per unit of GDP.  And if we weren’t importing from Venezuela and Saudi Arabia, we would happily import more from Russia.  We aren’t blameless.

This is why the western world seems to be in agreement that we will make a strong principled stance in making small-to-medium-sized sacrifices to inflict small-to-medium-sized impacts on Russia, but is avoiding the one thing that would have an immediate and substantive impact on the Russian economy.  Russia is like rubber and we are glue – whatever we do bounces off them and sticks to the US and the EU (that rhymes).  We can hurt Russia economically very quickly but because the West is not energy independent the result could be Czechs and Hungarians freezing inside their own homes.  Russia did not create the winter that defeated Napoleon and they didn’t create this one either – but they do know how to use winters to their advantage.

The good news is that Eurovision (the highly quirky yet entertaining music contest) has banned Russia from its next competition.  This really sinks a dagger into the heart of Marxist-Leninist ideology that calls for the proletariat to rise up and discard their capitalist imperialist overlords and create a society for workers, followed by the workers playing goofy songs on oversized paper-mache rainbow-colored piccolos.  Thank you to the Eurovision selection committee, but I want action that matters.

I support our president imposing the sanctions that he has imposed up to this point.  But I’m such a liberal-minded westerner that I recognize that it shouldn’t be the case that our brothers and sisters in Ukraine would have a better chance of escaping tyranny by re-enacting a scene from a James Bond movie.  I don’t know if it is feasible to close the valves completely, but we ought to at least be willing to give them a few turns.

And between now and the next Russian invasion, let’s find a way to have the luxury of closing those valves for good.

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2 thoughts on “The Fastest Way Out of Ukraine is Via Pipeline”

  1. John-Paul Schmidt

    You’ve summed up this aspect clearly. Western society’s policies have placed the world in a position to financially support the aggressors. While short term sanctions are influential, surely they are expected and the powers that be have prepared for them. Do we know they work on decision makers? Are sanctions only hurting the Russian populace and hardening them against liberalization?

    This has not been the first time the Putin administration has run afoul of the international community. The first Ukrainian troubles began rumbling in 2014. Human rights violations are rampant. The assassinations of Sergei and Yulia Skripal on UK soil in 2018 led to no noticeable repercussions.

    While the Republics of the UK and US have leaders that less myopic, the voters are engaged in a cold civil war that has led to legislative gridlock. The US congress enacted 344 bills last session. That’s less than half the average sessions in the 1970s. (see also govtrack.us/congress/bills/statistics)

    So I agree with the author, it is time to take a more long term, calculating stance on energy production. I doubt this can be done with an uneducated and emotional voting base.

  2. Matt Gochnour

    Agree with the sentiment in the article – none of the sanctions seem to address the energy dependence problem, and the anti-fossil fuel policy since 2021 hasn’t moved the US or Europe in a direction that would solve it long term.

    Meanwhile, we’ve seen the announcement in the past day or so of Russia’s Gazprom inking a deal with China to supply 50 bcm/year of gas via pipeline. Russia has been 1) diversifying its customer base and probably therein strengthens its real currency (energy) and 2) mitigating impact of the loss of Europe as its energy consumer were that to happen. The new German Chancellor, Scholz, seems to get it, announcing Germany would create 2 new LNG regasification terminals.

    The US, meanwhile, is sitting on some of the largest gas reserves in the world and is reluctant to put them to good use and increase its role in diversifying allies’ energy. Not to mention the revenue that could bring to the country and its $30 Trillion in debt. Gas used to be considered a transition fuel, and serious analyses show that fossil fuels will continue to be a major component of global energy consumption for decades to come.

    Sound policy seems to have been replaced by virtue signaling, even by the IOCs, shutting down shovel ready oil & gas projects without real replacement solutions that are economical.

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