The economy of mutually assured energy destruction

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Opponents have pointed out that there is a huge loophole in the economic and monetary blockade imposed by the West on Putin’s Russia: oil. As long as Russia can continue to sell oil on world markets, Putin can earn a lot of dollars and euros.

The higher the price of oil rises, the more Putin has the West on the barrel. Despite all the other measures to prevent Russia from accessing dollars, Russia’s trade surplus has been projected at $20 billion a month, almost entirely based on oil exports.

A Treasury official familiar with the financial sanctions confirmed to me that sales of Russian oil to US and other customers are permitted through what are known as general licenses. The purchase in dollars should be booked in a third country.

But in the past two days, that loophole has all but closed, not by government policy, but because private buyers distrust Putin and don’t know what Western governments will do next. Despite the exemption, refiners have anything but stopped buying Russian oil, and banks refuse to finance shipments. The private sector, in a rare show of patriotism, treats Putin like an outcast.

Biden and his European allies could therefore have a much harsher sanctions policy than they had anticipated, despite themselves. This will harm both Putin and the West. Russia will be even further short of dollar reserves and the West will pay more for its oil.

Thus, the mutually assured destruction of addiction to carbon fuels.

The time to get off this track, both in climate policy and foreign policy, was at least two decades ago. If only.

And if only the 2000 election hadn’t been stolen from the one senior official who understood the stakes earlier than most – Al Gore.

Now we need to make this green transition to renewable fuels under battlefield conditions. There’s nothing like oil at $110 a barrel to focus on.

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