Oil Spiking Because No One Putting America First
Both Parties Will Face Consequences
Oil opened in Asian trading Sunday night up another shocking $10 a barrel, reaching $126 at one point—a 13-year high, up from just $65 in December. The Biden administration and its pro-embargo cheerleaders in both parties are to blame, not the Russians.
If the price of oil is sustained at this level for more than a short period of time, it will cause a global recession. Gas could reach $5 per gallon or more. It just crossed above an average of $4 per gallon across the USA on Sunday.
If you think truckers are mad now, just wait. Rising transportation costs will increase the price of everything from food to housing. Already-rampant inflation will be out of control.
Of the many Biden-inspired parts of the crisis, the most recent were dumb comments made by Secretary of State Antony Blinken. On Sunday, he appeared to endorse the idea of banning Russian oil exports, caving in to anti-Russian hysteria in Washington and Europe. As Reuters reported:
The United States and European allies are exploring banning imports of Russian oil, U.S. Secretary of State Antony Blinken said on Sunday, and the White House coordinated with key Congressional committees moving forward with their own ban.
This is the insane work of a bipartisan, globalist ruling class that does not understand economics or even simple math.
Total world petroleum production is about 95 million barrels per day, and supplies are tight with little extra capacity. Russia is the third-largest producer with 11% of the world total, just behind Saudi Arabia. By contrast, Iran, the largest producer previously to face extreme sanctions, accounts for just 3% of global production. We can isolate Iran, not Russia.
It is simply impossible to remove Russian oil from the world market without causing the runaway spike in prices we are now seeing. The White House knew this before it didn’t. Even as it sanctioned Russian banks just over a week ago, it said it intended to exempt trading in energy products.
Disingenuously, White House spokesman Jen Psaki said:
The reason why the price of gas is going up is not because of steps the president has taken they are because President Putin is invading Ukraine, and that is creating a great deal of instability in the global marketplace.
In fact, Russia is still producing and willing to export just us much oil as before its invasion of Ukraine. It was the Biden administration’s excessive and sloppy sanctions on Russia that resulted in a de facto embargo on Russia. In particular, Biden’s decision not just to sanction Russian banks but to swipe $400 billion that the Russian central bank unwisely kept in U.S. financial instruments, and to bar that central bank from any dollar-denominated transactions, spooked banks and oil traders globally.
Even though the administration mused that sanctions don’t apply to energy products, and even though the Treasury Department put out a document on Friday reasserting that claim, fear over the climate of hysteria is winning out. Late on Friday, Shell made the first purchase of Russian oil since the sanctions, likely at the urging of the British government, and got creamed for its action. Now, Blinken and a nonstop parade of virtue-signaling Republican and Democratic congressmen entertaining an embargo has led to a crisis.
But isn’t it our duty to pay outrageous prices for gas and everything else to help the Ukrainians? Isn’t this like buying a war bond during World War II?
It is not. High oil prices won’t help Ukraine or deter Russia. In the near term, the spike in oil prices will enrich big exporters like Canada and Arabian Gulf nations. Russia will eventually resume exports, even if not at the level before the war. It simply produces too much oil and gas to be isolated. Furthermore, China and India, which declined to join the U.S.-led sanctions regime, will gladly buy what others will not. Japan has also stated the obvious fact that it needs to continue to buy Russian energy to avoid economic catastrophe. Europe will also cave when it begins to understand the crippling financial and political cost of oil anywhere above $90 a barrel.
The only thing paying higher prices will achieve is harming America. And why? What Russia is doing to Ukraine is atrocious. However, Europe, not the United States should take the lead in preventing further Russian aggression. Europe has 400 million people and a $21 trillion economy to Russia’s 144 million people and $1.5 trillion economy. Even Germany alone has an economy that is more than twice the size of Russia’s. These people can afford to defend themselves. American spending on problems in Eastern Europe only creates a moral hazard that prevents Europeans from spending what they should.
Furthermore, rather than rushing to pro-war hysteria and floating ideas like a NATO no-fly zone over Ukraine that would start World War III between nuclear-armed Russia and America, we need to focus more on not letting other people make their problems into our problems. The last war America won was the 1991 Gulf War. Recently, we have been involved in costly and humiliating military fiascos in Afghanistan, Iraq, Syria, and Libya. We are deeply in debt and have a military that cannot win wars. Furthermore, we face a major challenge from China with which Europe will be little help. (In fact, only Japan will render major support to that potential fight.)
Russia’s government is wicked and its war of aggression is cruel and unprovoked. But the anti-Russian hysteria afoot, reminiscent of the revival of McCarthyite hysteria we saw after George Floyd’s death and the 2021 Capitol riot, is devoid of any serious consideration of U.S. national interests. Politicians need to ask themselves if voters paying $5 a gallon for gas as they drive to polls in November will thank them or fire them. Congress and the administration should cut the preening, forget about playing global cop, figure out how to cut energy prices, and put America first.