And so it begins. Price caps don't work well when zero supply offered?
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
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Ok, you need to pick one side of an argument. First you say that the 2-3x increase in fuel costs has offset any reduction in European consumption of Russian fuels, and you criticize the G7 price cap as impractical. Now you're saying that Russia can somehow survive by completely turning off the spigot to Europe? Please explain how? Zero supply means zero payment. At some point, Russia HAS to find external funding to buy its oil and gas. Russia can't just keep covering the costs as that would drive inflation through the roof. You can't make money you don't have without impacting inflation, and the Russian population will quickly feel those effects, just as we are in the west..
Russia will likely be forced into a situation where it accepts some funding from Europe or it must get its fuel products to other markets. The problem is those markets don't exist, plus there are tremendous logistical problems changing the existing infrastructure. Most of Russia's exported fuel supply was directed westwards via pipelines. It's a huge effort to flip that over to eastward distribution via tanker vessel. It will cost a lot, it will take a lot of time, and there's no indication that such a move would offset lost European income. In the meantime, Russia has production with nowhere to go. The options are to drastically reduce production, which will impact some of the most important workers in Russia as they get laid off, or for the Russian government to keep funding production to keep people working (that's a very Soviet thing to do....and we see how well that worked out for them). Even if Russia did fund the commercial energy companies just to keep producing. where would they store it all? Trying to store the 2 million barrels of oil a day that went to Europe is no small task and such facilities simply don't exist...so, again, you have to build new storage facilities and pipes to get the fuels there, but all of that investment isn't generating a single ruble for the Russian economy, nor will it be profit-generating once this crisis is resolved.
Yes, Europe is in an ugly situation and we can all agree that, given hindsight, the European nations were foolish for becoming so dependent on Russian fuels. However, Russia also has limits on what it can do. The collective resources of the west are far better situated to weather a bad winter than is Russia. We've already seen increased shipment of fuels to Europe to build up stockpiles in preparation for winter. Now, that won't be sufficient but it's an indicator of just one workaround that could help offset problems. There may be options for North Sea oil and gas production to increase temporarily. The west has options. They aren't great but then neither are Russia's. This is a game of brinkmanship. It's what world leaders do. At some point, someone will blink...and Russia isn't positioned well to see off all the economic impacts it's currently experiencing. Oil and gas was the BIG economy driver for Russia. Turning it off entirely just makes Russia's situation worse.
I do want to touch on the 'tinfoil hat' comment for a second. I made that comment in the belief you were joking about the current situation being part of some vast scheme by Putin to bring the west to its knees. It now seems I was mistaken, and you really think that's what's going on here. In order for this to be part of such a complicated plan, it would require every world leader to do exactly what Putin expected at every step through this crisis. Let's take America's first offer to Ukraine, which was to evacuate Zelensky. In order for Putin's grand plan to work, he would need to know (a) that America would make such an offer, and (b) that Zelensky would refuse it. Putin would then need to predict that his armed forces would put up such a crappy showing, and that all of NATO would provide weapons to Ukraine to prolong the fight. World leaders are many things but I've yet to meet anyone, anywhere who could predict the outcome of so many decisions with such accuracy. Now, Putin may have evolved his thinking to use the current situation to try and buckle western economies but he's playing poker with just a pair of deuces (at best). The Russian economy is in already in the tank. Yes, the west is suffering from massive fuel cost increases and relatively rampant inflation...but so are Russian people. The west has levers to offset some of the effects of those problems, including increasing government debt - not a great idea, I accept, but it's a lever that's available to the west. Russia doesn't have those levers. Nobody, not even China, would be willing to underwrite Russia in its current condition.
I'll close with one of your earlier comments:
I'm pleased to accept the 'tinfoil hat' monicker and delighted that those that feel that way also think their leaders in US, UK, Australia/New Zealand and Canada have 'got this'.
You're creating an entirely false dichotomy with this statement. Just because I don't subscribe to conspiracy theories about Putin being a puppet-master supreme does NOT mean that I think the west's leaders have "got it right." I've been around the block far too many times to believe that ANY politician of ANY stripe has a single clue about how things work. As noted above, nobody can predict the future. Some very smart people (NOT the politicians, I stress, but the experienced staff who understand these topics in detail) are trying to find ways to pressure Russia to cease its aggression. The options are limited. In all international relationships the ability to act (agency) is hindered by structural issues. For example, NATO can't go schwacking Russia today because it would be counter to the Organization's charter. Equally, Russia can't just print rubles to get out of its economic problems. However, I think the west has done a decent job showing unity in the face of Russia's aggression and finding ways to help Ukraine.
Given the situation, maybe you could share the benefit of your wisdom to tell the west what we SHOULD be doing? Do we just give up and sacrifice Ukraine? If so, that won't stop Putin because he's that kind of aggressive bully who only responds to action. So...if the west must act, what should we do? What CAN we do more than is already being done. Yes, Putin and his cronies have some freedom of maneuver. They can turn off the pipes for a short time just to show intent but, in the end, they NEED the money coming in from the international community. Russia can't survive without it. I'm sure it will cause a lot of suffering for the average Russian citizen, and I'm truly sorry for that. However, it's always been the case that powerful people who make aggressive decisions have impacts on the general masses. Look at the First and Second World Wars as prime examples.
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