There will not be nor the dirty bomb, nor the atomic bomb, there will be instead the energy bomb. This is the bomb that Putin is building.
Here is the thesis of one of the most accredited commentators since "New York Times", Thomas L Friedman which is said to be read avidly even by the Chinese maximo leader Xi Jinping always hungry for ideas of the decadent West.
In the following paragraphs we try to summarize Friedman's point of view which is very diaphanous.
General Winter's War
As the Ukrainians advance in the territories treacherously annexed to the Russian Federation, world concern is growing over the possibility that Putin will decide to resort, as a last resort, to the atomic bomb. Actually Putin is preparing another no less devastating bomb type.
"IS the oil and gas bomb which is forging right before our eyes and with our involuntary help – and which could conceivably explode this winter,” writes Friedman.
If it did, the cost of energy could soar into the stratosphere, making it prohibitive to heat, work and travel.
Energy Attack: The Western World Could Be Divided
The political repercussions would be gigantic. The western front could divide and push many countries to seek some kind of "dirty" deal with Moscow to put an end to this obviously unsustainable situation. In the United States, for example, Trump's Republicans, but also progressives are getting worried about the growing costs of the Ukrainian conflict.
In summary: Putin is fighting a war on a double faced, military to stop the advance of the Ukrainian army on the ground and politician to wear out, by means of the energy cost, the willingness of allies to help and support Ukraine.
The first step of this strategy consists in destroy the energy infrastructure system of Ukraine and put the civilian population in the cold.
The second one is to use the price of gas and oil to carry out the same type of operation against the populations of the countries that are allies of Ukraine.
At the moment the West does not have a strategy on energy resources to mitigate the impact of this bomb which is, for its entire system of social and political cohesion, a scary prospect to say the least.
The contradiction of the West that wants 5 incompatible things
When it comes to energy Western they want five things and they want them all even if they are incompatible with each other. And Putin is just taking advantage of this inconsistency of the Western position. Here are the five things that Westerners want and that are clearly incompatible with each other.
- La decarbonization of the economy as quickly as possible to mitigate the consequences of climate change.
- Il price petrol, diesel and gas for heating at the lowest level so that you don't have to change your lifestyle by, for example, giving up some unnecessary travel, wearing a woolen sweater at home or doing something to save your individual energy consumption.
- The expulsion of regimes of Iran, Venezuela and Saudi Arabia continuing to want to pay little, use their energy and extract it in the quantities that Westerners need.
- Treat the oil and gas companies like pariahs and dinosaurs who are supposed to get us out of the oil crisis and then go off to quietly die somewhere and let the shiny new solar and wind companies take their place at the head of the energy chain.
- La construction of new oil and gas pipelines or alternative energy transmission lines without having them pass near the orchards, gardens and courtyards of their homes.
Clarity on priorities and objectives
In an energy war like the one we are experiencing, it is necessary be clear about goals and priorities. But it happens that the western alliance has no scale of energy priorities, but only vague aspirations with conflicting objectives and the illusion of being able to achieve them all as if by magic. Friedman writes: “If we persist in this position, we will find each other in a lot of trouble whether Putin really drops the energy bomb he is preparing for next Christmas”. And we already see something happening.
America has begun drawing on strategic reserves
- United States, for example, are starting to draw on theirs strategic oil reserves. The President Biden in fact announced the use of 15 million barrels from the strategic reserve during the month of December which will add up to the 180 million barrels used to keep petrol prices as low as possible ahead of the mid-term elections. Apparently the move helped Biden and the Democrats limit the damage. According to the "Washington Post", after this intervention, the strategic reserves of the United States of America were reduced to 57% of the optimal quota. Putin wants America to use up most of its own strategic oil reserve cushion now as happened with the Germansi who have given up on nuclear power and become dependent on cheap Russian natural gas
What is happening in Europe ?
Putin is also closely observing what is happening in Europe. The European Union is preparing to block imports of crude oil from Russia by sea.
This decision, together with that of Germany and Poland to block imports via pipelines, is expected to reduce current oil imports from Russia by around 90%
It is also considering ban European insurance companies coverage of shipments, brokerage services and financing for the export of oil from Russia to third countries.
It is believed that this measure could drastically reduce the number of customers of Russian oil. In that case the Russians would be forced to lower the price of their crude oil to a price set by the Europeans and Americans in order to obtain insurance coverage for the tankers carrying their crude oil.
Will it work?
Commenting on these measures Friedman he writes: “My sources in the oil industry seriously doubt that OPEC's price fixing for supplies will work. Saudi Arabia, the Russian partner of OPEC plus, is certainly not interested in accepting a precedent in which the price of oil is fixed in this way”. For more the international oil trade it is characterized by many gray areas where fixers and borderline structures operate that thrive on trade with Asia and market distortions.
One of these gray areas, for example, is the break of tracking during the transportation of oil. Tankers engaged in borderline activities turn off the tracking device and then turn it back on days after making the delivery. In this way they are able to recycle Russian oil. The stuff that a single large tanker carries can be worth $250 million. Therefore the incentive towards gray businesses is nothing short of enormous. It is therefore probable that these measures on which Americans and Europeans rely they won't work and that therefore they will have to look for other ways which are currently somewhat undefined. It is true that it is not easy to find them.
It happens in China
Now a new suspect player is being added to the game, it is China. There China has any type of long-term contract in his pocket a fixed price for the purchase of liquefied gas from the Middle East. He takes it at about $100 a barrel of oil equivalent.
It so happened though that due to the zero policy Covid, China's economy suffered a strong slowdown and so it happened with gas consumption. So China took part of the gas that had been sold to it at the price of 100 dollars and resold it to Europe and other countries at a significantly higher price (about 300 dollars per barrel of oil equivalent).
Xi Jinping, having already obtained his third term as general secretary of the Communist Party, could ease the restrictions related to Covid. If China returns to normal gas consumption, exports to Europe will end and therefore the availability of gas will become even more scarce.
It could happen in Russia
Given all this, as hypothesized by Friedman, in December Putin could block for 30 or 60 days all exports of Russian oil and gas to countries that support Ukraine, rather than submitting to the oil price set by the European Union.
This measure would be sustainable for Russia only in the short term. But it could achieve the purpose. And this would be right the energy bomb which Putin intends to give to the West for Christmas. In this scenario, oil could reach 200 dollars a barrel, with a proportional increase in the price of natural gas. There is talk of 10-12 dollars for gasoline at the pump in the United States. The beauty of this energy bomb for Putin is that, unlike the explosion of a nuclear bomb - which would unite the whole world against him - the explosion of a bomb on the price of oil it would divide the West from Ukraine.
The possible response of the West
We must convince ourselves, according to Friedman, that there'WestIf he doesn't want to beg Saudi, Iran and Venezuela to increase production, he must build your own energy arsenal equal to, if not greater than, the military one. We are in an energy war.
There is a need for energy of all kinds. Investors in the field of fossil energies must be reassured that, provided they produce as cleanly as possible, they will have an important place in the energy future of the West, alongside the solar, wind, hydroelectric and other manufacturers clean energy that American and European lawmakers are promoting with their climate measures. Friedman concludes this way: “I know. Not ideal. It's not where I hoped we'd be in 2022. But we're at this point, and everything else is truly magical thinking – and the one person who won't be fooled is Vladimir Putin."
From: Thomas L. Friedman, Putin Is Onto Us, “The New York Times,” Oct. 25, 2022
