January 27, 2022

Oil's not Well that Ends Well

Kurt Womack asks:

Why exactly does America wish to get into the Ukraine vs. Russia deal?

Tim replies:

Unfortunately we made a deal with them years ago. We promised to guarantee their security in return for their destroying the old Soviet nuclear arsenal on their soil. They did it but we haven't been living up to our end of the bargain, by and large. Expanding NATO to the Ukraine was the solution they sought to employ, but it was a terrible idea that was guaranteed to get a military response from Russia. Russia will not tolerate NATO in one of the former Soviet Republics. They just won't allow it. They invaded Georgia for the same reason. The geniuses at State should have understood that. Russia is always fearful of invasion and will not allow anyone too close to them. They want a buffer. It's ingrained in their psyche. Foggy Bottom should have understood that. So now we are being backed into a corner, and Crazy Joe Biden, his poll numbers lower than the price of an eight track tape, is desperate for a distraction. So is Putin, who is fighting inflation over 8% and most of it on food. Neither side can afford to back down. And China is watching from the tall grass, and may move on Taiwan. We are regally screwed.

Well, I agree Kurt. And are we ready to go to war? With a country with a nuclear arsenal that is much newer than our own? Bill Clinton made the deal with the Ukraine when he was in office. Never should have happened. And NATO expansion to Russia's doorstep was just asking for it. There was no good reason to do that; the Russians don't take kindly to foreign powers being at their borders. It's in their psychology to want a buffer. It is why Putin wanted Crimea; he took it from the Ukrainians because it was an ideal staging ground for an invasion of Russia proper. Now he wants the rest of the country. It has been a traditional vassal state of Russia for a reason; it's the likely invasion spot from Europe. It was also the breadbasket of the old U.S.S.R. and has substantial oil and gas reserves (mostly untapped) https://www.iea.org/reports/ukraine-energy-profile/energy-security#:~:text=Ukraine%20has%20a%20century-long%20history%20of%20oil%20and,at%209%20billion%20tonnes%20of%20oil%20equivalent%20(Btoe). That threatens Russia's hegemony on Europe's energy, which also gives the U.S. cause for interest. If you look at Putin's long-term strategic moves he invaded Georgia before the BTC Pipeline could be completed, (the first thing Russia did in their '08 invasion was bomb the pipeline.) That pipeline and it's natural gas equivalent was going to bypass both Russia and Iran and ship fuel to Europe. It was a cornerstone of U.S. policy (and it had extra incentive from Gazprom's shutting off natural gas to the Ukraine.) Also, Georgia wanted to join NATO. So Putin invaded and had a very similar approach to how he did it. This situation is quite similar. I would point out that Russia has an inflation rate over 8%, with food being the top item rising (something Putin would recognize as a danger as he lived through the rebellion which led to the fall of the Soviet Union and was largely over lack of food) and the U.S. inflation is over 7%. Both Putin and Biden need a foreign adventure to distract from their failed domestic policies.

Oh, and Biden's approval of the Nordstream pipeline means the Ukraine will no longer be the primary crossover country for Gazprom natural gas to Europe. It's already dropped from 65% to under 50% and that will only accelerate as the Nordstream comes online. Certainly Ukraine has reason to ramp up it's own production as Russian supplies dwindle. Biden should have stopped Nordstream. Now Putin wants to squash the Ukraine as a potential rival to Russian oil and gas to Europe. We want to develop it.

Posted by: Timothy Birdnow at 09:30 AM | No Comments | Add Comment
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