Sanctions Against Russia

[bkroger86]

Euros moving to cut off Russia as well: https://www.washingtonpost.com/world/2022/03/08/eu-russian-gas/

They get 40% from Russia right now. Would cut it down to 14%, eventually to 0%. At least until Russia backs off.

 

[loadzz]

Putin.

But he's a strident anti-communist. He had a huge hand in organizing the violent coup that overthrew the election of '95 where the communist party won a huge majority over yeltsin and his pro west party.

 

[Mikej]

To address the primary questions of the OP:

1. Oil is not a single product. Based upon grade, geography, distribution networks, government regulations, refinery capabilities and local consumption needs crude is directed to specific refineries where it is processed into distillates and various fuels. Those products then travel through established logistic networks to consumers.

2. Superficially, it may seem that the oil production in a region is more than sufficient to meet that same region's energy demands. However, what is critical to understand is that the types and quantity of petroleum products produced in a region are often not of the same type and quantity that its economy consumes. It then becomes apparent why many oil producing countries need to import certain types of petroleum products and export others (eg Venezuela and the US).

3. Russia is the world's largest net energy exporter accounting for somewhere in the neighborhood 7% of global oil supply. Sanctioning Russian oil would likely result in a historic surge in US energy prices. There is no precedent for such an event, so God only knows how high US energy prices would go before tanking the US economy. Russia will still sell most if not all of its oil to countries not participating in the sanctions, providing those countries with lower domestic energy costs and a major economic advantage over countries participating in the sanctions.

Given already low oil global inventories, accelerating demand, and Russia's large share of the global oil market, such sanctions are likely to damage the West far more than the East. However, given our inept political leadership, I would not be shocked if such sanctions are actually attempted.

I read a summary of the "sanctions" being discussed by the Biden admin. Normally, the US will sanction a country and then any entity who then violates that sanction. So, for example, say a medical institution in Iran wants to buy medical equipment from a international German industrial supplier. The German supplier will NOT sell the equipment to Iran because doing so risks its international business being fined and hit with sanctions from the US gov.

In the case of these Russian energy sanctions, it appears the US, at least at this point, will not impose fines / sanctions on international businesses participating in transporting Russian oil to countries other than the US. Thus, these sanctions are designed to have a lower impact, and primarily on US consumers only, though they may cause chaos in the international logistic networks than transport oil as a result.

Thanks for taking the time to explain these things ^^. It's really helps me understand better how complicated it all can be.

Can you imagine living in Russia over the past two weeks?

The value of your currency plunged. Stock markets closed and stocks down 99%. Run on banks. Run on consumer goods. Your Visa/Mastercard stopped working. Cut off from the global internet. Every major global company stopped doing business with you in a matter of days…Microsoft, Apple, Shell, etc.

And all the while the russian citizen actually believe their great leader to be doing all this for them, and The "Mother Land!"

 

[VanceInWA]

Here we are 13 days into the Russian invasion of Ukraine. At $45 million/day, Biden has so far allowed $585 million in US dollars to be sent to Putin, more than half-billion to support the Russian military. Will the addled one FINALLY sanction Russian oil imports? Now?

 

[Longwalkhome]

Oil Prices Jump on Reports U.S. Will Ban Russian Oil and Natural Gas Imports

Multiple news outlets reported that a ban on Russian oil and natural gas is expected as soon as Tuesday. | Economy

www.breitbart.com

 

[zcap]

Can you imagine living in Russia over the past two weeks?

The value of your currency plunged. Stock markets closed and stocks down 99%. Run on banks. Run on consumer goods. Your Visa/Mastercard stopped working. Cut off from the global internet. Every major global company stopped doing business with you in a matter of days…Microsoft, Apple, Shell, etc.

People are doom and glooming about our collapse here while ignoring the collapse of Russia happening before our eyes in real time.

These headline narratives are being pushed in the media, but as usual reality is far more nuanced.

1. The FX exchange rate of the Ruble declined in large part because the Russian central bank was not able to sell its US Treasury FX reserves to stabilize the Ruble due to the US freezing those reserves. This means that US and EU goods being sold in Russia (e.g. luxury items) will be more expensive, but the purchasing power of the Ruble for domestic products is much less affected.

2. The Moscow stock exchange has been closed since Monday last week and is not down 99%. What has declined dramatically is ADRs (American Depository Receipts) of Russian public companies listed on the London Stock Exchange that were trading until mid Thursday last week. In other words, American investors who own shares in Russian companies listed in London have been panic selling their shares to other American investor and realizing large losses in the process. The Russian gov has announced it will take steps to stabilize the market, but ultimately it remains to be seen how the exchange will trade when it opens. I would not be surprised if the Moscow stock exchange remains closed until the Ukraine conflict is resolved.

3. The extent of banking interruptions in Russia due the Visa, Mastercard etc... is mixed. There are many alternative payment systems, both domestic and foreign, that are available to Russians that the government has been pushing for some time to limit exposure to Western financial institutions. I don't have the same level knowledge of the Russian banking system as I do of the US, so I am not sure how this is playing out practice. Apparently there has been a sizable move over to Chinese based alternatives in the past weeks.

Major media in both the West and East is mostly propaganda, so it is difficult to understand what is happening without a lot of extensive subject matter research. A safe bet on any given headline we are seeing is "It is way more complicated than it appears."

 

[Xaevian]

These headline narratives are being pushed in the media, but as usual reality is far more nuanced.

1. The FX exchange rate of the Ruble declined in large part because the Russian central bank was not able to sell its US Treasury FX reserves to stabilize the Ruble due to the US freezing those reserves. This means that US and EU goods being sold in Russia (e.g. luxury items) will be more expensive, but the purchasing power of the Ruble for domestic products is much less affected.

2. The Moscow stock exchange has been closed since Monday last week and is not down 99%. What has declined dramatically is ADRs (American Depository Receipts) of Russian public companies listed on the London Stock Exchange that were trading until mid Thursday last week. In other words, American investors who own shares in Russian companies listed in London have been panic selling their shares to other American investor and realizing large losses in the process. The Russian gov has announced it will take steps to stabilize the market, but ultimately it remains to be seen how the exchange will trade when it opens. I would not be surprised if the Moscow stock exchange remains closed until the Ukraine conflict is resolved.

3. The extent of banking interruptions in Russia due the Visa, Mastercard etc... is mixed. There are many alternative payment systems, both domestic and foreign, that are available to Russians that the government has been pushing for some time to limit exposure to Western financial institutions. I don't have the same level knowledge of the Russian banking system as I do of the US, so I am not sure how this is playing out practice. Apparently there has been a sizable move over to Chinese based alternatives in the past weeks.

Major media in both the West and East is mostly propaganda, so it is difficult to understand what is happening without a lot of extensive subject matter research. A safe bet on any given headline we are seeing is "It is way more complicated than it appears."

Very good example.

 

[Bam]

We never stopped US production. https://www.macrotrends.net/2562/us-crude-oil-production-historical-chart

It dropped during the COVID shutdown in 2020, but it's been rising since then and it's back up to about 12% lower than the peak before COVID. With prices above $100 per barrel, production is going to keep going up.

US oil production steadily had been dropping from the 1980s until 2008 (didn't matter if Democrats or Republicans were in control, and both were), and then oil production almost doubled during the Obama years. It shot up a lot during the Trump years also. Which basically means one thing: oil production has little to do with the Feds. We don't have Fed-run oil companies. Private businesses decide how much to produce, and they decide that based on two things: the cost to extract a barrel and the price they can sell that barrel for.

BTW your own link proves our current situation is the fault of the democrats.

Supply and demand. Traffic is back up to pre covid times, while oil production is still down at low covid levels. Democrats have done everything to prevent production to return to normal pre covid levels, to meet pre covid demand. Demand is high, supply is low, prices go up!

Feb 2020, Oil production was at an all time high of 13,100 barrels a day, March 2020 the lock downs began, transportation everywhere hit record lows, oil started piling up and production was halted. 5 months later oil production hit a low of 9700 barrels.

Going into 2021, traffic returned to almost pre covid levels, but oil production remained down, at low covid levels: Feb 2022 11,600 barrels/day VERSUS Feb 2020 13,100 barrels/day. Traffic is back up, but we are producing 1,500 less barrels of oil a day!!!!!!!!!!! So! More traffic, but less oil production. At the same time, Biden permanently killed Keystone XL, and new drilling opportunities, all which would have increased domestic oil production.

SIMPLE supply and demand economics. Traffic returns to pre covid levels, however oil production remains at low covid levels. Supply cannot meet demand, oil prices go up, gas prices go up.

So now we are banning russian oil imports, while doing nothing to restore US oil production. Everyone who voted for Biden better enjoy those $6+ gal prices.

THANKS DEMOCRATS!

 

[zcap]

The US energy problem is self imposed through policy which fundamentally equates to a over decade of sanctions on domestic US producers starting with the Obama admin. The executive branch has cancelled pipelines with billions of private capital already invested, the judicial branch has nullified exploration and drilling contracts, the legislative branch has dumped staggering amounts of tax money and credits into renewables, many blue states fight to prevent needed pipelines from crossing their state lines, US financial entities refuse to lend to oil producers at competitive rates, the investment community has mass diverted client investment away from oil, and the US media and public school system pushes constant climate change panic while suppressing how utterly unfeasible renewables are at the scale needed to run a modern economy.

Meaningfully expanding domestic oil production is not an overnight process and requires large amounts capital investment and at least a year or two to build out labor pools and infrastructure. The state dept U-turn on Venezuela and Iranian oil and the constant propaganda from the current admin about price gouging, taxes and renewables will likely deter that needed domestic expansion from occurring until there is a meaningful change in US government policies. That may be years away depending upon election outcomes.

Energy security is a nation security issue. Unfortunately, instead of waking up to that fact, the current Ukraine conflict is being used as an excuse to push renewables.

 

[VanceInWA]

zcap: "Energy security is a nation security issue. Unfortunately, instead of waking up to that fact, the current Ukraine conflict is being used as an excuse to push renewables."

That's sick. Trying to leverage skyrocketing inflation and the death of Ukrainians for his "green" policy makes Brandon a truly evil person.

 

[clanhanson]

zcap: "Energy security is a nation security issue. Unfortunately, instead of waking up to that fact, the current Ukraine conflict is being used as an excuse to push renewables."

That's sick. Trying to leverage skyrocketing inflation and the death of Ukrainians for his "green" policy makes Brandon a truly evil person.

Without renewables we will never achieve energy independence. Without oil we will never advance renewables technology and infrastructure. Both are needed, but the dial needs to start leaning the other direction.

 

[arakboss]

Can you imagine living in Russia over the past two weeks?

The value of your currency plunged. Stock markets closed and stocks down 99%. Run on banks. Run on consumer goods. Your Visa/Mastercard stopped working. Cut off from the global internet. Every major global company stopped doing business with you in a matter of days…Microsoft, Apple, Shell, etc.

People are doom and glooming about our collapse here while ignoring the collapse of Russia happening before our eyes in real time.

Putin brought this on his people.

 

[Bam]

Without renewables we will never achieve energy independence. Without oil we will never advance renewables technology and infrastructure. Both are needed, but the dial needs to start leaning the other direction.

We needed to more build nuclear plants, but of course fear overruled rational thought and here we are.

Could had plenty of energy to power all of those electric vehicles we should be driving according to Bootyjudge.

 

[clanhanson]

We needed to build nuclear plants, but of course fear overruled rational thought and here we are.

It's a shame. Great jobs to be had, too.

 

[bkroger86]

BTW your own link proves our current situation is the fault of the democrats.

Supply and demand. Traffic is back up to pre covid times, while oil production is still down at low covid levels. Democrats have done everything to prevent production to return to normal pre covid levels, to meet pre covid demand. Demand is high, supply is low, prices go up!

Feb 2020, Oil production was at an all time high of 13,100 barrels a day, March 2020 the lock downs began, transportation everywhere hit record lows, oil started piling up and production was halted. 5 months later oil production hit a low of 9700 barrels.

Going into 2021, traffic returned to almost pre covid levels, but oil production remained down, at low covid levels: Feb 2022 11,600 barrels/day VERSUS Feb 2020 13,100 barrels/day. Traffic is back up, but we are producing 1,500 less barrels of oil a day!!!!!!!!!!! So! More traffic, but less oil production. At the same time, Biden permanently killed Keystone XL, and new drilling opportunities, all which would have increased domestic oil production.

SIMPLE supply and demand economics. Traffic returns to pre covid levels, however oil production remains at low covid levels. Supply cannot meet demand, oil prices go up, gas prices go up.

So now we are banning russian oil imports, while doing nothing to restore US oil production. Everyone who voted for Biden better enjoy those $6+ gal prices.

THANKS DEMOCRATS!

This is a great post highlighting the examples of what someone who knows nothing about the oil industry sounds like when they're talking about the oil industry.

When production plummeted in 2020 (during Trump's term, BTW), it's not like someone just turned off the lights and went home early. Producers went out of business.

Starting that back up isn't like flipping a light switch.

 

[Bam]

This is a great post highlighting the examples of what someone who knows nothing about the oil industry sounds like when they're talking about the oil industry.

When production plummeted in 2020 (during Trump's term, BTW), it's not like someone just turned off the lights and went home early. Producers went out of business.

Starting that back up isn't like flipping a light switch.

March 2020.... lock downs began, people stopped driving, oil supplies piled up, production went down.

Fall 2020, people started driving again, between Aug 2020 and Nov 2020, in a THREE MONTH PERIOD oil production was increased 13%. SO YES, IT IS LIKE FLICKING A SWITCH!

The moment Biden took office on January 2021, oil production dropped and it took another two moths to get things sorted out again. Even so, under Biden over the following year, Jan 2021 to Jan 2022 oil production only increased 6%, still well below pre covid levels, yet Trump managed to increase oil production 13% in 3 months following a harsh shutdown. The momentum died the moment Biden took office and attacked the oil industry, had he not, we could be back to near covid production levels.

During the last oil boom, towards the end of the Obama admin, oil companies were selling their equipment. However, when Trump came in, the oil companies jumped on it and hit the shale fields, they even drove the cost of fracking down. Same would have happened here if Biden didn't kill the oil industry Jan 2021, oil production would have vastly increased through out 2021 instead of remaining stalled.

I know the oil industry well having worked in South Dakota and saw the rapid changes with my own eyes.

 

[clanhanson]

March 2020.... lock downs began, people stopped driving, oil supplies piled up, production went down.

Fall 2020, people started driving again, between Aug 2020 and Nov 2020, in a THREE MONTH PERIOD oil production was increased 13%

Since Biden took office in January 2021, over a year period 2021 to 2022 oil production only increased 6%, still well below pre covid levels.

Just like the last oil boom, the companies would have quickly came back and oil production would have been vastly increased over the last year, instead of Democrats putting in barriers against drilling new wells.

Have you lived in an area in close proximity to fracking? On paper it's great. In reality it was an ecological nightmare that also tainted our groundwater supply. Seismic activity also began where it had never been recorded prior. Also, allowing drilling in our Parks is a step I don't want to see. There are two sides to every coin and some barriers are a necessary evil.

 

[Certaindeaf]

Have you lived in an area in close proximity to fracking? On paper it's great. In reality it was an ecological nightmare that also tainted our groundwater supply. Seismic activity also began where it had never been recorded prior. Also, allowing drilling in our Parks is a step I don't want to see. There are two sides to every coin and some barriers are a necessary evil.

There's zero evidence fracking has negatively affected groundwater.

 

[RicInOR]

Biden announces U.S. ban on Russian oil: dealing 'blow to Putin's war machine'

 

[zcap]

Biden announces U.S. ban on Russian oil: dealing 'blow to Putin's war machine'

As outlined earlier, the primary effect of this will be make Americans pay more for oil, some other party (eg the Chinese) to pay less for oil, have minimal negative and possibly even a net positive effect on Russian oil revenue, and make the US economy less competitive. So, why is this being done? I hypothesize:

1.) The political class can say it did something to an American public who largely has no knowledge of commodity markets
2.) The Democrats can make a claim that inflation is due to Russia instead of their own horrible domestic policies
3.) Inept leadership