Timothy Nelson5 said:I don't think you quite caught my drift, because you're arguing against something I didn't even say—something most people already take for granted, I suppose.
Oil and gas prices actually had a much bigger impact in the years leading up to the invasion, specifically from 2014 onwards.
During that window, the White House was busy stacking up cash reserves for a war adventure. Sure, about half of that got frozen, which was unexpected and apparently caught the White House off guard.
Actually, the timing is a bit different than that.
High oil prices right before the Russian invasion of Georgia.
High oil prices right before the Russian annexation of Crimea.
After those events, oil prices stayed relatively low and stable, largely thanks to the expansion of American fracking.
That stability was basically nuked by a senile Biden on his very first day in the White House, just signing whatever document his handlers shoved under his nose. He even admitted himself that he 'didn't know what he was signing.'
In a way, he signed off on giving Putin a massive incentive to invade Ukraine.
But prior to the invasion, it was precisely those high oil (and gas) prices that padded the Russian budget and essentially paved the road to war.
Immediately preceding the war, yes.
Putin finally felt emboldened once his slow-motion coup against Trump in the US succeeded.
Trump was against Nord Stream 2, and he used to press NATO members to stop relying on Russian energy and finally hit that 2% defense spending target they all agreed on.
Trump pushed for fracking. If he were still around, I guess US oil production might be at least 0% higher, maybe even 50% more for natural gas, more LNG terminals would have been built, and the Keystone pipeline wouldn't have been halted.
Under those circumstances, Putin wouldn't have even dreamed of invading Ukraine. A core part of his playbook was assuming that after a 'blitz' victory and taking Kyiv, Europe—completely dependent on Russian gas—would react weakly, maybe with some cosmetic sanctions.
By clumsily killing the Keystone pipeline project, Biden gave Putin the green light he needed.
All in the name of the Green New Deal, I suppose.
Biden basically shot the American economy in the foot.
On that same day, gas prices at the American Henry Hub jumped 100% up, and that was effectively the start of the energy price surge before the war in Ukraine.
But if what you're describing were true, Russia, the Saudis, and the whole OPEC group would have cut production to keep prices high.
It seems you clearly don't grasp the point of sanctions.
I don't think anyone honestly expects Putin to just pack up and walk away from the invasion of Ukraine.
The whole motivation behind Putin’s move... I guess it really traces back to those newly discovered hydrocarbon deposits under the sea near Crimea... and also that Solovjansk-Kramatorsk area which the Ukrainians have been fighting so hard to hold onto throughout this entire conflict.
As for what might have happened next... maybe an oil embargo would have hit sooner—like, instead of December 5th, perhaps by early September. Russia might have made a bit less from speculative trading, but I doubt that would have been the deciding factor.
It likely would have started five or six months earlier.
If you look at the comparative charts for Brent, WTI, and Urals, you can see the discounts on Urals were at their peak when speculative pressure was highest. Once that dropped in early September, the Brent-Urals spread narrowed, and it only really widened again after December 5th.
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Speculative pressure is such a subjective thing, isn't it? It doesn't just rely on supply and demand; it's more about how people perceive them.
That's probably why those firm statements from Western leaders right at the start of the embargo helped keep the speculative price swings somewhat in check.
But even then, it wouldn't have changed the gas market situation much; the outcome would be the same, and the White House was clearly banking much more on gas prices than on oil.
True enough... though I suppose that's because the Germans, led by Merkel, kept pushing for even deeper reliance on Russian pipelines instead of diversifying their supply or actually building out LNG terminals.
Well, the Saudis buy a massive amount of weapons... they're fourth in global spending, yet they practically have zero domestic military production compared to the top three.
The real issue with the Saudi military isn't the gear or the hardware, it's the personnel—it's pretty much the same struggle they face in Russia.
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I am largely in agreement with the points made here.
It would have started 5-6 months earlier.
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Speculative pressure is a subjective variable; it doesn't depend directly on supply and demand, but rather on the perception of them.
Therefore, decisive statements from Western heads of state at the very onset of an embargo would have largely curbed speculative price volatility.
Precisely... but that is because the Germans, led by Merkel, stubbornly pushed for even greater dependence on Russian pipelines instead of diversifying their supply and building LNG terminals.
I disagree with this. Taking all other factors into account—LNG is several times more expensive than piped gas. That is a matter of pure technology, unrelated to politics. If Germany had diversified its supply earlier (meaning, if they had built LNG terminals "ahead of time"), it would have been a waste of money for them back then. Those terminals would have sat idle because nobody would buy much more expensive LNG while having access to much cheaper Russian gas through a pipeline. Someone would have either gone bankrupt from investing in an unused terminal, or the loss would have had to be covered by other funds. No matter how you look at it, at that moment, such an investment was a loss. Politically speaking (especially in Germany), anyone who attempted such an investment would have seen their political career end instantly, as it would have been viewed as squandering taxpayer money. Private investors feel the same way; they don't want to enter a business that guarantees losses. It was the same issue with the project on Krk. It’s all well and good to have a diversified supply, but someone has to foot the bill.
Germany claimed they were 'diversifying' their energy supply—by building Nord Stream. In reality, there was no diversification at all; they simply stuck with the exact same supplier while bypassing the transit countries. There wasn't even an issue with transit itself, it just carried a cost. This was the fundamental error. By allowing Russia to dictate terms this way—effectively sidelining other transit nations that are also consumers—they handed Moscow a massive lever. It allowed them to manipulate relations between EU states by playing with gas prices. It was hybrid warfare in its purest form. You could have neutralized this relatively easily with a single regulatory fix: having the EU negotiate gas purchases collectively. It’s logical; buying in bulk yields better pricing, a specialty of EU bureaucrats. But we never reached that stage. Perhaps those LNG suppliers played a part too, as they certainly wouldn't benefit from such a shift.
Naturally, German policy was predicated on Russian gas. Who wouldn't want the cheapest possible fuel for such a massive industrial powerhouse? If you look at the Russian economy stripped of its oil and gas revenues, things look grim. Rationally speaking, Russia should be the last party interested in jeopardizing this relationship, because it is far easier for others to find new suppliers than it is for Russia to find new buyers. But Germany failed to realize that the people sitting in the Kremlin aren't exactly driven by rational thought. Now, every option is back on the table, including the possibility of LNG becoming significantly cheaper than piped gas. That is why we see these LNG terminals being built now, rather than before.
I suspect Russian gas will eventually flow back into Europe. However, they will have to bake in all the losses caused by their own foolish policies. Those costs will be amortized over the next 10, 20, or 30 years before supply resumes. Ultimately, the true losers will be the citizens of the Russian Federation. But then again, we get the governments we deserve; they must pay the price for the decisions made in the Kremlin. They are already paying it, with their military suffering losses in Ukraine, but once the conflict ends, they will spend years dealing with the fallout of these hybrid tactics. As the saying goes, you reap what you sow.