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Ban the oil, save the world?
On partial sanctions and Green hawks
Hi, Ari here… As we continue to track the unfolding war in Ukraine, my new piece for you digs into what policymakers and experts are considering regarding a far tougher move against Putin…
Going after everything but the oil…
As Vladimir Putin’s invasion of Ukraine grinds on, the U.S. and Western Europe are continuing a range of tough sanctions. You’ve probably seen some of the results, with headlines like:
Russia's ruble worth less than 1 cent after West tightens sanctions from CBS News, or The Russian Elite Can't Stand the Sanctions from The Atlantic.
So that is working, up to a point.
And yet, Russia’s greatest economic and geopolitical asset is oil. And it remains largely untouched.
A push to ban Russia’s oil started gaining more traction in the past few days. Speaker Pelosi came out for it. Then more lawmakers. President Biden said it’s on the table.
And Ukraine’s president is telling foreign officials its the most vital economic move to support his country:
The West has not gone after Russia’s oil yet, for several reasons, including:
Driving up gas prices
Exacerbating ongoing problems with the supply chain and inflation
Potentially isolating Putin and risking more repercussions
Putting new pressure on other policy trade offs (oil sanctions against other countries; domestic drilling)
Many analysts emphasize that the main impediment is the high cost for countries that cut off oil. That’s why some European countries like Germany, which rely on Russia even more than the U.S., are ruling out this option right now.
For the Ukrainian people, this is the most urgent emergency possible. For other countries, there is a short-term geostrategic balance between thwarting or punishing Russia, and not escalating into a wider war; and a longer-term goal to counter this more aggressive Russia on economic and foreign policy terms.
The long-term is where renewable energy comes in.
There are many, many good reasons to move away from fossil fuels (you probably know them and I won’t list them here). Some experts see this oil-related dilemma as a chance to lean more into renewable energy. Some of this is already playing out, here’s how economic publication Barron’s summarized it:
“…the current spike in oil prices could derail efforts to transition toward clean energy in the short-to-medium term, as officials look to secure supply chain-resilience, but speed it up in the long run.”
Environmentalists tend to agree on the long term. Take renewable energy advocate Bill McKibben, who writes in his newsletter The Crucial Years:
“Russia’s power (besides nuclear weapons) is almost entirely based on.. gas and oil… 60% of its export earnings are hydrocarbons. For decades, Europe has cowered for fear Moscow would turn off the tap. But.. new technology… means Europeans can heat their homes with electricity instead of gas.”
Specifically, he argues Biden can deploy the Defense Production Act to send clean energy heat pumps to Europe, just as the U.S. did with Lend-Lease, and defray much of the local cost of any Russian gas sanctions in Europe.
A “choice point”
As for the longer term, in a new interview with me, McKibben lays out his larger argument for a renewable economy that actually reforms US foreign policy options and what he sees as domestic political hardball:
“If we move towards renewable energy fast, this is now the cheapest way to generate power on this planet. Sun, wind and the batteries to store them are now cheaper than coal and gas and oil… The principle extends beyond Putin—think of all the other autocrats that depend on oil and gas revenues to do what they do.
Why do we pay attention to the king of Saudi Arabia?
Not because he’s got great ideas about policy. He just chops people’s heads off with a sword when he doesn’t like them. But he’s got too much oil.
Why did the Koch Brothers get to buy a political party, and use it to deform our democracy?
Because they’re our biggest oil and gas barons.
If we get off this stuff, the possibilities for the world are truly remarkable, and this feels like it may be one of the last real choice points we get on this journey… This is our chance to do a bunch of good things at once.
And if we can’t bring ourselves to do this—while we’re watching the pictures of people demonstrating just incredible courage in Ukraine—then I don’t know if we’re ever going to.”
These are significant goals to consider, as the world reckons with a nuclear Russia on offense in battle, as it maintains leverage over the fuel that still powers most economies.
P.S. Before the war began, McKibben also joined me to discuss the rising demand for electric cars in America, and how that could also free up foreign policy options: