Alexey Malgavko/Sputnik via AP
An oil refinery in Omsk, Russia
Naysayers have been pointing out that there is one huge loophole in the West’s economic and monetary blockade of Putin’s Russia—oil. As long as Russia can keep selling oil on world markets, Putin can earn plenty of dollars and euros.
The more the price of oil rises, the more Putin has the West over a barrel. Despite all the other measures to keep Russia from accessing dollars, Russia’s trade surplus has been projected at $20 billion a month—almost entirely based on oil exports.
A Treasury official knowledgeable about financial sanctions confirmed to me that Russian oil sales to U.S. and other customers are permitted through what are known as general licenses. The dollar purchase would need to be booked in a third country.
But in the last two days, this loophole has all but closed—not via government policy but because private purchasers are leery of Putin and not sure what Western governments will do next. Despite the exemption, refiners have all but ceased buying Russian oil, and banks are refusing to finance shipments. The private sector, in a rare show of patriotism, is treating Putin as a pariah.
So Biden and his European allies may have a much tougher sanctions policy than they intended, in spite of themselves. This will hurt both Putin and the West. Russia will be even more short of dollar reserves, and the West will be paying more for its oil.
Thus, the mutually assured destruction of dependence on carbon fuels.
The time to have gotten off this track, as a matter of both climate policy and foreign policy, was at least two decades ago. If only.
And if only the election of 2000 had not been stolen from the one top official who grasped the stakes earlier than most—Al Gore.
Now, we are having to make this green transition to renewable fuels under battlefield conditions. There is nothing like oil at $110 a barrel to concentrate the mind.
