Russia Gets Oil Back, But This Time With a Cap As American Oil Still Suffers

Nikolay Gyngazov / shutterstock.com
Nikolay Gyngazov / shutterstock.com

Anytime the G7 countries get together, there is bound to be somebody upset with how things turn out. When the European Union and Australia join the party, it’s only bound to get worse. On December 2nd, they got together and changed the face of oil on the global market. G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, and they had all agreed to provide Russia with capped oil sales earlier this year, but this solidified the deal.

European Commission President Ursula von der Leyen gave a speech about the benefits of the cap. “This price cap will benefit directly emerging and developing economies, and it will be adjustable over time so that we can react to market developments.” This cap helps because it is directly targeted to the maritime services industries, which included insurance and trade finance to provide their services for Russian oil for $60 per barrel or less. With the benchmark for Atlantic crude being set at $83 per barrel, it’s a sharp drop.

The US Treasury Department figures Russia will accept the cap as it’s high enough to incentivize them to continue selling on the global market but low enough to reduce the profit margins to avoid helping fund their war efforts. To duck the cap, Russia would need to work with countries outside G7, and they lack the reliability Russia needs.

For what it’s worth, Russian officials have found the price cap laughable. Kremlin Spokesman Dmitry Peskov claimed the country rejected the proposed price cap. Mikhail Ulyanov, the nation’s ambassador to international organizations in Vienna, said the European Union would need to learn to live without Russian oil from this year going forward, and he predicted the EU will blame Russia for weaponizing oil against them.

US officials as well as EU representatives, and other nations across the globe have listed Russia as the top country for manipulation across the energy market as a whole. From cutting down on natural gas supplies to the EU before sanctions took place, and before it was mysteriously blown up, they have been making the market their personal playground. As a result, everyone suffers.

Von der Leyen has been proud of the EU and what they have done to make the market work for them in the meantime. Remarking about how she has watched them look at the Russian manipulation and adjust adequately and coped with the ever-changing landscape for the energy sector in Russia, he sounds almost like a proud Nani.

One of the biggest adaptations has been the use of electronic thermostats in their homes and businesses. Von der Leyen has been suggesting that the states in the European Union be getting the profits from these fuels, and not the companies themselves. “In our social market economy, profits are good. But in these times it is wrong to receive extraordinary record profits benefitting from war and on the back of consumers. In these times, profits must be shared and channeled to those who need it the most.”

While all of this is good for Europe, and it could mean the US loses countries to buy our oil and natural gas, back at home nobody is doing anything to try and increase the production. If Biden would increase production (even if it’s just to “help the EU”) then that would get US oil pumps running closer to full strength again.

It could lower our oil and gas prices here at home, and even help stave off some of this inflation and the disastrous economy he created. Then again, that also is contrary to his socialist agenda and would run afoul of the Democratic dream that they can never fulfill. It’s a shame Biden won’t cross over into common sense land, and it’s an even bigger shame that he’s dragging the country down with him.