The start of the Russian invasion of Ukraine (Part 1)
in War in Ukraine ·
aaaaaaaa said:If Russia decides to hike prices or cut off gas supplies to Europe, the continent will simply pivot to alternative sources and recover quite rapidly. Russia is essentially sabotaging its own economy while simultaneously erasing the sole reason why Europe treats them with any degree of caution compared to how the UK or the USA operates. Europe currently sources about 38% of its gas from Russia, and frankly, that’s the extent of the leverage. They will survive without it by ramping up imports from other markets and diversifying their energy mix. It’s a simple matter of transition.
It is Putin who finds himself in a corner here, not Europe.
The reality is quite elementary: the buyer is king, as it has always been and will always be.
THAT ASSUMPTION FALLS APART IF THE BUYER IS ALREADY BEING OVERCHARGED.
Japan, Korea, China, and the US—they all produce goods that are 60% cheaper and higher quality than what we are seeing.
The European Union represents too much competition for the Americans, which is why they need to drive up resource costs; there is only one true king in this scenario.
The Chinese are paying roughly $250-$300 for gas, while the EU is currently staring down $2,000.
The buyer is only king when the seller is desperate. This particular seller is a global leader in agricultural production; they produce almost everything themselves and are largely self-sufficient. If they buy anything from abroad, it isn't because they lack the resources, but simply because it's cheaper elsewhere.
So, we have to distinguish between theoretical fairy tales and the actualities of life and practice.