“Russia got Hungary, ate Turkey, slipped on Greece and defeated China.”
So is an elementary school exercise that helps students remember countries. It also illustrates something else, albeit in a simplistic way: how interconnected the world is. And the world economy has never been more intertwined than it is today.
It’s hard to believe, but US political leaders can’t understand this economic truth – a mistake that was made in full when the Biden administration decided to impose an embargo on Russian energy.
The President considers it a great step. But he forgets the fact that in 2021, Russian oil accounted for only 3 percent of crude oil imports to the United States and only 1 percent of crude oil refined in America.
Which makes the oil embargo, with all due respect, both counterproductive and idiotic.
First, the decision was one-sided, which means that America’s European allies can not go – this is the first breakthrough of a single dam that opposes Russia. Because Vladimir Putin knew that this would happen if Europe was ridiculously dependent on Russian energy, he was quite happy with what the West expected. And, frankly, he will most likely succeed.
Second, since the president’s decision, which is supported by many in Congress, only affects the United States, and we import only a small amount of Russian energy, what’s the point? Obviously, a minor embargo on Russia will not hurt. And since they will do it elsewhere, the sanction is absolutely insignificant. The result: the move is political and purely symbolic, demonstrating that the U.S. government is in a fantasy country. But in the real world the effects will not be symbolic.
Of course, sanctions on Russian oil sound good for politicians and the American people who want to feel that they are helping Ukraine. But for the most part, they don’t understand how global oil markets work, why sanctions are usually ineffective, and how the law of unintended consequences will greatly affect Americans.
Consider:
- For the first time ever, America has achieved energy independence under the Trump administration. This milestone, both an imperative of national security and an economic one, was shattered when President Biden took office. Instead of building on that success, he took a hostile stance against the oil industry in favor of a unilateral “green deal” on climate change.
After the administration blamed it for all the environmental woes in the world, Big Oil was clearly unable to resolve the price crisis overnight. Since the president annoyed the very people he now desperately needs to help lower prices, he shouldn’t expect the red carpet. As karma suggests, what goes around comes.
2) The price of gasoline has already risen to historic highs before the oil embargo. So you don’t have to be ingenious to understand that price, with math, will definitely continue to explode. Oil, being volatile and inelastic, is subject to volatile price fluctuations whenever instability occurs. The fact that the administration refuses to see the consequences of creating even more instability shows how inviolable it is.
The invasion of Ukraine was unfounded and horrific. As incredibly friendly people, the Americans want to help the Ukrainians, but only to the point – the moment that is fast approaching. The embargo will push oil prices to $ 200 a barrel, which means $ 5 to $ 6 a gallon (and above), which will make many Americans wonder:
“I feel sorry for Ukraine, but I can’t afford the way to work, let alone the food bill – and everything else that has soared above the already insane inflationary prices. It’s time to focus on America, not on a country involved in a regional conflict that I almost didn’t know about before the invasion and can’t find on a map all my life. Enough means enough. America first and foremost. ”
Not the best way to keep Americans in Ukraine. Let’s also not forget that the neighbors usually flooded the neighbors ’fuel tanks during the gas price hike in 2008, which will be a walk in the park compared to what will be.
PS: Thank you, former Pennsylvania Gov. Tom Corbett and Republicans, for passing the nation’s largest gas tax in 2013 (now nearly 60 cents a gallon). The roads are not the best, but we are sure to pay for it at the pump. Appreciate it.
3) Gas prices strongly affect passengers. But they also increase transportation costs when moving goods by freight, rail, air and water. Add bills for home heating, manufacturers take more production, and airlines and cruise lines raise fares to cover fuel costs, and the result will be tremendous pain for Americans – including reduced productivity and job losses. And don’t forget the huge jumps in food bills – not only because of transportation costs, but also because Russia and Ukraine account for a significant amount of world grain and fertilizer – and you’re dragging us into a forced global recession that helps no one.
4) One of the purposes of the sanctions is to isolate Mr. Putin and Mr. Russia. The problem is that you can’t. It is simply impossible to bankrupt the world’s 11th largest economy, which accounts for 10 percent of the world’s energy – including most natural gas in Germany (the world’s fourth largest economy) and the rest of Europe – and accounts for 3 percent of world GDP.
China, the world’s second-largest economy and has close ties to Putin, will increase purchases of Russian energy and products. What is even worse for America is that Russia’s economic operations, thanks to our short-sightedness, will increasingly be conducted in Chinese yuan rather than US dollars. You couldn’t write it worse because that’s exactly what China has wanted for years. This is another share at the heart of America’s extremely powerful status as a host of reserve currency. Lose it – the ability to be king for all international transactions – as Britain did in the early twentieth century, and your place at the head of the global fall order has diminished considerably.
5) Is it clear to Washington that rising oil prices (it has already doubled, and maybe tripled) actually enriches Russia? How can this achieve what the West is trying to do? So you’re burdening sanctions on Russia, but you’re pumping billions into their pockets – and you’re putting the West in recession and causing an uncontrollable spiral of inflation?
6) How ironic that since the American leadership decided to declare war on the Great Oil and become dependent on foreign sources, it is now on its knees facing opponents of Iran and Venezuela, asking them to open their oil taps to increase supplies. Here’s the idea: maybe we should stop demonizing American oil and pump it out – especially since the West’s release of strategic reserves is a joke, because it literally doesn’t move the needle of oil supply / price.
7) In general, sanctions do not work. Of course, global sanctions against Russia are unprecedented, but because the country produces more than enough food and energy to support itself and cannot be isolated, Mr Putin believes he can survive the West. Many Western countries have regularly circumvented or deceived sanctions against Iran, so it is naive to think that sanctions will be festive – especially when so many countries rely on Russian products.
Just look at the story. In America, there have been sanctions against Cuba – literally in our backyard – for half a century, without affecting the leadership. Iran, although affected by the current sanctions, is still moving forward. And in South Africa, Zulu leaders have asked America not to impose sanctions in the 1980s because they harm people far more than established leaders.
To be clear, non-oil sanctions should be imposed against Russia, but they are simply a means to an end. In general, we need a dialogue with Moscow to find a reasonable solution without escalating the regional conflict into the next world war. There has never been a perfect world, and this is no exception. Resolving this crisis is paramount, but meaningless “solutions” should not come at the expense of either American citizens or the physical and economic security of our country.
Chris Freund is an independent columnist and commentator whose column appears every Wednesday. You can contact him at CF@FFZMedia.com Follow him on Twitter @chrisfreind.
