Why Ukraine Should Keep Striking Russian Oil Refineries
Why Ukraine Should Keep Striking Russian Oil Refineries
Washington’s fears about energy markets are misplaced.
Washington’s criticism is misplaced: attacks on oil refineries will not have the effect on global energy markets that U.S. officials fear. These strikes reduce Russia’s ability to turn its oil into usable products; they do not affect the volume of oil it can extract or export. In fact, with less domestic refining capacity, Russia will be forced to export more of its crude oil, not less, pushing global prices down rather than up. Indeed, Russian firms have already started selling more unrefined oil overseas. As long as they remain restricted to Russian refineries, the attacks are unlikely to raise the price of oil for Western consumers.
Why is everyone in here discussing "oil" when the article is talking about oil refining.
Russia was / is a big player in the refined petroleum market and exported a LOT of Diesel, Gasoline, Kerosene and other petroleum distillates.
This distinction is important because oil refineries are multi-billion dollar multi-year projects, they are not built quickly or easily. Most of the world is also refinery constrained, meaning that their existing refineries are already working at or near capacity.
Here's the capacity utilization data for the United States. As you can see the US has very little slack in its refinery capability so any dip in the ability to import refined petroleum products will, and does, lead to sharp price rises.
So yes, Ukraine blowing up an oil refinery in Russia will absolutely cause global price hikes for refined petroleum products...and I fully support them doing it.
tl;dr Y'all are discussing the wrong thing and "oil" is absolutely not a synonym for the refined petroleum products that come of out of an oil refinery.
America is a NET EXPORTER of oil. I know they weren't back in the 70s when all the current American politicians learned about where oil came from, but we are now. Every refinery that blows up HELPS America's economy - it just hurts consumers because big oil thinks they can pretend that oil prices jumping by 5% means they can hike gas prices by 100%.
America is a NET EXPORTER of oil.
Big whoop. The article isn't talking about oil production and it isn't "oil" that matters; it's what that oil is refined into that matters and the US doesn't have the capacity to create much more in the way of refined products like Diesel, Gasoline, Kerosene, etc than it already does. In fact we've been importing a LOT of refined petroleum for years now to make up for our lack of refining capacity and pre-invasion much of it was imported from Russia itself!
So when Russian oil refineries suddenly explode and those refined petroleum products are no longer available on the world market the prices go up. This is exactly how you can end up with low oil prices but high gasoline prices. If Russia can't refine the oil they'll try and dump it on the market for whatever price they can get but that low cost oil is headed into a refinery system that's already working at capacity and can't make anything more than it already does.
It's a bit more complex than that. Just because the US is a net exporter doesn't mean that it doesn't still need to import. There are several types of oil and currently the US still needs foreign imports of certain types that we rely on but don't produce enough of.
That being said, I still think it makes sense to destroy infrastructure supporting the Russian invasion.
Except they still sell oil at global market prices, and a big player was caught colluding with OPEC. In a global commodity market without government intervention it doesn't make a huge difference where the oil is being pumped up
Even if Russia increases crude oil exports to compensate, virtually all of their gasoline is produced domestically for domestic consumption. That demand isn't going to just disappear. Every liter that Russia stops producing from these refinery strikes will be imported from other sources.
They will have to Kazakhstan in order to make up the difference (which they have already started, afaik), then prices go up on the global market for gasoline.
If gasoline price goes up, there's economic incentive to buy crude oil to produce gasoline. That raises price of crude oil. You can't avoid it. It's all connected. You reduce global production and you raise price.
I'm okay with reducing my gas use and/or paying more for gas in order to keep Putin out of Ukraine. I know that not everybody has room to stretch their dollar, so I don't mean to come off as callous, but my minor inconvenience is easily worth stopping bombs from hitting civilians in Ukraine. We already know that appeasement doesn't work. Putin will not stop. Let's stop allowing money to decide for us whether we should let monsters thrive.
How much is acceptable to you? Is there a point where it isn't worth it anymore?
Inflation was around 10% before the federal reserve hiked the interest rates.
Your rent going up $200 every year OK? Grocery bill, gas, etc?
I wonder where people draw the line between acceptable and not acceptable. We're still feeling the economic effects, just the fed managed to reduce inflation at the cost of other economic pains. For example people buying homes or financing cars is much more expensive now. Or companies are laying people off because credit is more expensive and it's harder to expand. Big companies like Comcast may choose to wait a few years before building a new fiber network- waiting for rates to go back down. That kills lots of high quality jobs that would have existed otherwise.
How much economic pain is acceptable? You call it an inconvenience and then you call it callous. I believe it is a bit callous, yes.
You and I may be in a good financial position (I'm personally not afraid), but what about the rest of working class America?
There are two directions at this point that the war can develop A) negotiated settlement where Russia annexes territory or B) war between Russia & Western countries.
Do you have a brother? Nephew? Cousin? Would you be willing to sacrifice his life to help Ukraine? Would you be willing to sacrifice your own life?
I ask these things not to say supporting Ukraine is foolish or anything like that, but just to point out that Russia is willing to sacrifice everything for Ukraine. If we are committed to Russia losing, we will need to sacrifice a lot more than we currently are.
If we are not willing to go all the way, what are we even doing in Ukraine?
You bring up a good point that isn't addressed very well. There's still less refined oil being produced that is demanded. In this case, its for Russia. I suppose this demand is partially reduced as Russia will try to minimize unnecessary refined oil usage (maybe eventually increasing local prices to discourage unnecessary use), but even then I still feel their reduced refining capabilities should have an impact on prices.
I suppose that other refineries could pick up the slack, but I'm uncertain whether that really makes sense for them, and there's not an easy way to countries against Russia can reduce their own usage of refined oil in the near term.
Ultimately, time well tell whether these attacks are having a strong impact on global refined oil.
EDIT: one thing that they do mention, that counteracts my point above is the fact that Russia exporting additional unrefined oil, that would mean unrefined oil pricing would decrease, which could counteract the reduction in production of refined oil.
Reason 1: because Russia is actively committing ethnic cleansing against Ukraine
Raising global oil prices should not really be a consideration when you're fighting a war for your survival. Anything that can help Ukraine survive is good.
Blowing up oil refineries may be a net benefit anywhere on earth but certainly in Russia it is.
Why Ukraine should keep striking Russian oil refineries = Why Russia should continue attacking Ukraine.
This is an example of why Lemmy should implement posting bans for accounts with way more downvotes than upvotes. Then I wouldn't have to read this fucking drivel.