December 4, 2022

The great energy war

There is no doubt that the biggest ‘Make in America’ enterprise has always been ‘Making War’, followed by ‘Making Money’ out of it. But forcing Russia to invade Ukraine, compounding this foolishness by continuing to fuel the conflict, and calling for boycott of Russian oil and gas, Biden this time has put the economies and interests of its European and other allies at stake 

By Lt Gen Prakash Katoch

Delivering the State of the Union address on March 1, US President Joe Biden boasted how he has cut off Russia from the rest of the world. He also announced the release of 60 million barrels of oil from global reserves, of which 30 million barrels would be out of US reserves. He did not elaborate from where he was getting 30 million barrels from the global reserves because America’s only friend left in the West Asia is Qatar – the terrorist co-brother. Biden had no idea when he boasted about 60 million barrels released from the global reserves (which too was doubtful) that the US itself consumes an average of about 20 million barrels per day while the EU consumes 15 million barrels per day.

On March 31, the White House announced that the US will release one million barrels of oil per day from its strategic reserves to help cut gas prices and fight inflation across the country. The statement said that Joe Biden plans to tap the nation’s Strategic Petroleum Reserve for the next six months as domestic producer’s ramp up production. The statement further said, “The scale of this release is unprecedented: the world has never had a release of oil reserves at this one million per day rate for this length of time. This record release will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up.”

There is no doubt that the biggest ‘Make in America’ enterprise has always been ‘Making War’, followed by ‘Making Money’ out of it. But forcing Russia to invade Ukraine, compounding this foolishness by continuing to fuel the conflict, and calling for boycott of Russian oil and gas, Biden this time has put the economies and interests of its European and other allies at stake. 

Llewellyn H Rockwell Jr, Chairman Mises Institute in Auburn, Alabama, wrote in his article ‘A Manufactured War’ published on March 31, “Few people today ask the most important question about the conflict between Russia and Ukraine. Many people want America to stay out of the fight, but even they don’t ask the vital question. Why does the world face a crisis today? ……The answer is simple. America, under the leadership of President Joe Biden and the forces controlling him, has done this and, by doing so, brought the world to the brink of disaster.”

According to Ronald Ernest Paul, American author, activist and former politician, “Three weeks into this terrible war…. instead of supporting negotiations between Ukraine and Russia that could lead to a ceasefire and an end to the bloodshed, the U.S. government is actually escalating the situation which can only increase the bloodshed…..It sounds an awful lot like the Biden Administration intends to fight Russia down to the last Ukrainian.”

“The scale of this release is unprecedented: the world has never had a release of oil reserves at this one million per day rate for this length of time. This record release will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up.”

But Joe Biden is ecstatic. The US arms manufacturers are getting orders for more weapons systems, which in turn will fund and support Biden’s bid for a second presidential term. Besides, Biden is throwing open America’s energy reserves – selling them four times the price of Russian gas and oil. Biden has cracked the whip on the oil industry asking them to ramp up production though US refineries in the south coast are designed only to process heavy oil variants. Since 2019, the US had blocked heavy oil imports from Venezuela and replaced them with imports of heavy Ural variants from Russia, which is still ongoing.

Also, the Biden administration is not bothered that rampant hydraulic ‘fracking’ can poison groundwater, pollute surface water, impair wild landscapes, and threaten wildlife. For example, toxic fracking fluids, including known cancer-causing chemicals like benzene and toluene, are exempt from US federal regulation under the Safe Drinking Water Act. So, why would the US oil industry, ordered to increase output, bother?

Biden’s announcement of releasing one million barrels per day is actually clutching at the last straws. This has come after Saudi Arabia and UAE snubbed his calls to increase oil production. The US has not been able to strike oil deals with Venezuela and Iran with both countries still subject to American sanctions. The Israel-Arab Summit organised by the Israeli Prime Minister Naftali Bennett with US Secretary of State Antony Blinken in attendance doesn’t seem to have made any viable breakthrough, which was more than expected with the US having ravaged the West Asia for several decades. Israel also remains apprehensive that America rejoining the Iran Nuclear Deal will not jeopardise Israel’s security.

Russian President Vladimir Putin has delivered a double whammy to Biden. The Central Bank of Russia has announced that from March 28, the Russian Ruble currency is Bound to Gold; rate is 5,000 Rubles per gram of gold bullion. In terms of Gold Bullion, this is a major blow to the US Dollar worldwide. The IMF has also warned that sanctions will hit the dollar. Much that the US doesn’t want oil deals by countries around the world other than in US dollars, it can do little other than threatening sanctions. Even Iran to whom the US is looking up for oil has said it will trade with Russia in national currencies, not the dollar.

Germany being the largest consumer of Russian oil in Europe, German Chancellor Olaf Scholz had earlier said he opposes cutting off energy supplies from Russia, terming imports of oil and gas of “essential importance” to European economy, and saying, “It’s therefore a conscious decision on our part to continue activities of business enterprises in the area of energy supply with Russia.”

Biden is throwing open America’s energy reserves – selling them four times the price of Russian gas and oil. Biden has cracked the whip on the oil industry asking them to ramp up production though US refineries in the south coast are designed only to process heavy oil variants. Since 2019, the US had blocked heavy oil imports from Venezuela and replaced them with imports of heavy Ural variants from Russia, which is still ongoing

But now Putin has set a deadline for foreign buyers to pay Russia in Rubles for gas purchases, failing which gas supplies to the countries will be cut. So, Germany has baulked saying western allies are determined not to be ‘blackmailed’ by Russia. But Germans and others are welcome to go ahead and pay four times the price to Biden who can only meet partial requirements. As to the ‘blackmail’ bit, it is the US-led West that has blackmailed Russia with arbitrary sanctions, even de-linking it from the SWIFT system and freezing funds in the Central Bank of Russia, as also deposits by Russians in Swiss Banks.

During its 46th session in Geneva on March 24, the UN Human Rights Council (HRC) called upon states to stop imposing unilateral sanctions and condemned their use as a means of political and economic pressure – a virtual slap to Biden and America’s blind followers. 27 countries out of 47 including Russia, China and India, voted for the relevant resolution, while 14 states including the US, EU countries, the UK and Ukraine, opposed, and six delegations abstained from voting.

Hungarian Prime Minister Viktor Orban says there are countries which will not be able to substitute Russian gas with the more expensive American alternative. Also, that Russian gas is his country’s only option, as Hungary is landlocked and won’t be able to receive liquified gas from the US. He also said, “This war is not our war, we can’t win here, but we can lose everything. The question is will we have an economy left by the end of it or not.”

As of now, the EU continues to import US$1.1 billion worth oil and gas daily from Russia. The best part is that despite the US Executive Order dated March 8, banning crude oil imports from Russia, America continues to import crude oil from Russia. According to the ‘US Energy Information Administration’s’ Weekly List of Crude Imports by Country till week ending March 25 shows the US imported 1,00,000 barrels of Russian Crude. So the US public is also being lied to. That is why there are opinions that since the US is likely to continue to cheat on its own sanctions, Europe also should likewise handle the sanctions to lessen the economic effects lest it ruins its citizenry; not doing so will only increases the size of the recession it is soon likely to experience.

Germany being the largest consumer of Russian oil in Europe, German Chancellor Olaf Scholz had earlier said he opposes cutting off energy supplies from Russia, terming imports of oil and gas of “essential importance” to European economy, and saying, “It’s therefore a conscious decision on our part to continue activities of business enterprises in the area of energy supply with Russia.”

The trouble with the Joe Biden administration is that when the brain gets dislocated, it can only think of war and money making; all else is passé. Re-locating the brain appears unlikely in the instant case without major surgery. No fake covers and rhetoric like ‘democracy’ and ‘rule of law’ can change that. In any case not much can be expected from a country which doesn’t mind getting its children shot in schools and trauma of the children witnessing the act because it sucks up to the ‘gun lobby’ for votes.

The author is an Indian Army veteran. Views expressed are personal and do not necessarily reflect the views of https://strategicaffairsindia.in

Leave a Reply

Your email address will not be published. Required fields are marked *

Follow us on Social Media