Barrels of oil | PDM File Photo
Part XIV: The Ukraine Crisis
The United States and Canada are the world’s biggest and fifth-biggest oil producers. Both countries produce 16.5- million and 5.1-million barrels per day (bpd), respectively. As members of NATO, both countries can help fellow alliance members, especially Germany, with all the millions of bpd they need. Yes, for at least one-to-two years as a short-term solution. Or a “Plan B,” as this column called it last Wednesday.
After all, Europe gets from Russia only 2.2 million barrels per day (bpd) of crude oil and 1.2 million bpd of petroleum products. Russia is only the third-biggest producer of oil at 10.7- million bpd. The Kremlin is Europe’s biggest oil supplier, providing just over a quarter of EU oil imports in 2020. The United States and Canada can begin shipping the necessary fossil fuels needed by Europe immediately — to replace the Russian exports of oil and petroleum products, which generate for the Kremlin approximately the equivalent of U.S. one-billion greenbacks per day, minimum. But while Russia is the world’s largest exporter of gas, Russian exports account only for about 45% of the European Union’s imports in 2021.
Europe now needs less gas and petrol as summer traditionally starts in European countries on the last Sunday of March. The hot months peak in June up to August, when most Europeans take their annual vacations.
If Europe ends seven days its importation of Russian oil and gas, the entire Russian economy collapses. Therefore, how can Russia continue to finance its illegal and immoral war in Ukraine and other carnage-causing, and crazy military operations in countries like Syria or for that matter, Chechnya? Can the Kremlin turn oil into vodka? Or the liquid to brew coffee and tea? Will military conscripts, especially mercenaries from Syria and Chechnya, want to receive combat pay and salaries in petroleum, even if it is called “black gold”?
The Strategic Petroleum Reserve (SPR) alone can provide Europe’s energy needs in the meantime. The SPR is an emergency stockpile of petroleum maintained by the United States Department of Energy (DOE). It is the largest known emergency supply in the world, and its underground tanks in Louisiana and Texas have the capacity of 714-million barrels (113,500,000 m3). Perhaps the SPR has more than a billion barrels of reserves. Nobody knows the exact volume, as its quantity is perhaps a military secret. In fact, President Biden has authorized already the release of one-million bpd per day of the SPR reserves for 60 days in order to reduce the prices of gasoline and diesel at gas stations in the United States.
“If Europe ends seven days its importation of Russian oil and gas, the entire Russian economy collapses. Therefore, how can Russia continue to finance its illegal and immoral war in Ukraine and other carnage-causing, and crazy military operations in countries like Syria or for that matter Chechnya?”
Canada and other NATO members that produce oil have also their equivalent of the SPR. The U.S. Energy Information Administration (EIA) has probably all the information about oil and gas productions of all nations and their respective equivalent of the SPR.
President Biden can use the Defense Production Act (DPA) of 1950 to order the doubling of America’s output of petroleum products. The DPA is a United States federal law enacted on September 8, 1950, in response to the start of the Korean War. It was part of a broad civil defense and war-mobilization effort in the context of the Cold War. The DPA has even been used by the Trump and Biden Administrations in producing ventilators, masks, other medical equipment, therapeutics, and vaccines against the COVID-19 disease that is causing the ongoing pandemic.
The White House may also use the DPA to order the increase in the oil production by the American oil industry, the corporate members of which also holds some 9,000 leases of oil-rich federal lands that are still idle. Yes, the “oil barons” do not desire to disturb the “law of supply and demand,” which humorists said then-President Trump allegedly wanted the Republican-controlled Senate “to repeal (sic).” The American oil industry oligarchs (that this columnist sometimes spells as “OILigarchs”) are that greedy.
The “OILigarchs” simply use the technique of “price gouging” to increase their corporate profits over their current production. If they balk at increasing their oil-pumping and refinery, operations, the U.S. Army Corps of Engineers can adequately run their infrastructures that the DPA allows the U.S. government to do so. After all, there is not only a “universal war against the pandemic” but also the looming bigger war in Ukraine that may lead to World War III.
President Biden can use the Defense Production Act (DPA) of 1950 to order the doubling of America’s output of petroleum products. The DPA is a United States federal law enacted on September 8, 1950, in response to the start of the Korean War.”
I think that using the SPR of the United States and its Canadian version are only some of the short-term solutions for Europe’s and other oil-importing countries. But …
The medium-term solution for Europe’s energy needs is to persuade Azerbaijan and its willing neighbors like Iran to join its “Caspian Sea Energy Corridor.” Because of its location, Azerbaijan can supply cost-effectively via pipeline through Turkey the fossil-fuel needs of Europe. While Azerbaijan is presently ranked the 21st-biggest oil-and-gas producer in the world, Iran is rated 8th-biggest with 3.1-million bpd current production. Both countries and their neighboring nations can produce more — with the investments of Western Europe and North America. And of course, protection against Russian invasion. This will be discussed more in the next edition of this column by next Wednesday.
The long-term solution is simply to start building more Green-sources of energy not only in Europe but also in the entire world. And producing more electric-powered vehicles and transportation systems. Also mandate likewise for all the edifices, houses, and even parking buildings on Planet Earth to install solar panels on their roofs and walls, starting in Europe. But then again, that will call for even a new series in this column to discuss the feasible ideas.