Gas Embargo Would Hit Russia Hardest

https://www.statista.com/chart/26927/estimated-change-in-russias-gdp-due-to-western-sanctions-per-sector/

by rntn • 4 years ago

85 98 4 years ago

retrac3• 4 years ago

It'd also hit Europe very hard. Natgas is like a third of European electricity generation and much of the heating. Europe has supplies for the winter but if the conflict is extended and the embargo maintained, millions of Europeans would be under heat rationing and rolling blackouts beyond 2022. It wouldn't be a humanitarian disaster with some planning but it's certainly not going to be popular, nor particularly good for the economy.

moltar• 4 years ago

But EU shall not worry because the US can readily supply it at even higher price.

retrac3• 4 years ago

It's not that there isn't sufficient natgas to offset most of the Russian production. The LPG terminals, pipelines and other infrastructure required for that doesn't exist yet, and even if we started crash construction projects today they wouldn't be online in time to prevent a disruption. That said, such construction clearly needs to start anyway.

lumost2• 4 years ago

If the us could feasibly supply the gas via LNG at cost then I’d imagine it would have been done.

The best bet would be for all energy suppliers to max production, however there is good evidence that that is already the case due to preexisting energy shortages.

Next step would be shutting down energy intensive operations such as bitcoin mining, gold mining, driving, potentially some steel production and shipping activities.

throwaway5752• 4 years ago

That is why it is only being contemplated in response for a brutal and unprovoked invasion of a sovereign country. It wasn't contemplated lightly. And Putin flagrantly leverages this power over Europe... paying for the privilege of enriching a neighbor that has now made it clear is your determined enemy is less unpopular than you may realize.

zihotki• 4 years ago

It's a pity, but what else we can do to stop the agression? As an European, I'm ready to bear the costs if it will help to stop the agression and the war. Spring is coming and it should be enough time to prepare for the next winter.

edit: spelling

AnonymousPlanet3• 4 years ago

Half a year is not nearly enough time to prepare. It's not just heating and electricity. It's also chemical industry etc. You will have to be willing to do more than just turn down the heating a bit. How about job security? 20% inflation?

There will be much anger. However, with Covid-19 there was no one really to blame, so people turned against local politicians imposing measures or people turned towards conspiracy theories for explanations and comfort. Here the culprit is clear and has one name.

martinko• 4 years ago

This is why abandoning nuclear was a horrendous mistake.

nate_meurer4• 4 years ago

I think history will ultimately judge this as the Merkel administration's biggest shortcoming.

Sol-2• 4 years ago

Most of e.g. Germany's gas consumption is from heating, not electricity. So nuclear plays a minor role, though admittedly even needing just 10% less gas might be the difference of being able to procure what you need from non-Russian suppliers or rationing. (Sure, heating and electricity is kind of equivalent if many households had heat pumps, but they don't.)

Nuclear or not, the horrendous mistake was not reducing dependence on Russian exports even when their aggressive foreign policy was apparent even 10 years ago. That was inexcusible complacency.

throw0101a• 4 years ago

It'd also hit Europe very hard. Natgas is like a third of European electricity generation and much of the heating.

By percentage of their gas imports that come from Russia: DE, LT, PL, and IT at about 50%; FR and NL at about 20%.

* https://www.nytimes.com/interactive/2022/02/15/business/ener...

* https://archive.fo/iUJ7j

By volume, mostly Germany and Italy:

* https://i.redd.it/qs12fw6kmdj81.jpg

sharken• 4 years ago

Which will make it harder for Germany and Italy to enforce effective sanctions towards Russia.

Hopefully they will do the right thing and support Ukraine anyway they can.

A good indication is going to be if Germany will support the exclusion of Russia from SWIFT:

https://financialpost.com/pmn/business-pmn/germany-open-to-c...

9887474• 4 years ago

Poland is just finishing a pipeline to Norway, we'll stop buying any Russian gas at the beginning of 2023. And we also have ability to import LNG through a shipping terminal at Swinoujscie.

dimitar• 4 years ago

Ukraine itself is proof of how undisruptive is lowering natural gas use as it reduced it's own imports back in 2014.

Natural gas has a lot of substitutes in electricity generation and other uses, and demand will fall as prices rise (good for global warming anyway). Energy poor households can get help, so no one will freeze to death, without subisizing the natural gas. Spring and Summer are holding which makes this the best time to act.

Advanced market economies like the ones in the EU are very resilient to supply shocks like this and Eastern European countries can be helped.

Over the long term dependence on insane dictators is also bad for the economy and diversification and decarbonization are good!

parineum• 4 years ago

You seem to be assuming that the substitute for natural gas plants isn't coal.

dtx1• 4 years ago

Speaking as a german, i'd be happy to wear another pullover and deal with rolling blackouts, when the alternative is war.

MandieD• 4 years ago

Pullis gegen Putin

jacquesm3• 4 years ago

That's too bad then. I'll drain the pipes here and we'll live without heat. Fortunately it is a relatively mild winter and we're getting towards the end of it.

Compared to what Ukraine is going through right now that's a very small price to pay, it is ridiculous to be standing there on the one hand hand wringing about the Ukrainian hardships and on the other to buy our fossil fuels from the aggressor directly financing the war.

rastignack2• 4 years ago

That's too bad then. I'll drain the pipes here and we'll live without heat. Fortunately it is a relatively mild winter and we're getting towards the end of it.

And with cold showers of course.

bjelkeman-again• 4 years ago

There is a good article at The Guardian, discussing replacing the Russian gas. The conclusion seem to be that this will be very hard and take a long time.

https://www.theguardian.com/business/2022/feb/25/how-can-eur...

rectang6• 4 years ago

That rings true. It reminds me of the US reducing its dependence on foreign oil, which was also very hard and took a long time — but was worth it.

axiosgunnar• 4 years ago

It'd also hit Europe very hard.

If I lived in Europe I wouldn't care.

No matter the cost (taxes etc.), no matter if I would have to wear multiple jackets at home.

I would still be in favor.

jeroenhd• 4 years ago

I don't believe it for a second. Energy prices in Europe have become extremely high and will continue to climb as Russian gas exports are sanctioned more and more. A full embargo would make it financially impossible for many European homes to get heat. Chemical processes and installations that take advantage of the generation of both CO2 and heat, like greenhouses, will be forced to either close down or increase prices, with a direct impact on the availability of affordable foods, chemicals and products.

With a full gas embargo, we're one polar vortex anomaly away from protests that will only favour politicians with Russian friends who are already calling for lower sanctions. In the short term this will have an effect, but unless American gas producers artificially lower their gas prices, the long term will only see more Russia-aligned politicians gaining prominence.

Europe's reliance on America and Russia has been a problem for a while and we're seeing the impact of it as we speak.

However, I do believe that "the economy" will be fine, but "the economy" mostly benefits the richest layers of society. That wealth doesn't trickle down.

rectang6• 4 years ago

unless American gas producers artificially lower their gas prices

Is that an option? Through US government subsidies or something similar?

rhino369• 4 years ago

Does America even have the capability of sending more gas to Europe? I know there are some Natgas ships, but not that many.

user432678• 4 years ago

Easy, Russia stores around 650 billions of dollars abroad. Confiscate it to cover the EU losses. Simple as that, you act like Hitler, you got to be punished.

kerneloftruth• 4 years ago

   but unless American gas producers artificially lower their gas prices

They should start producing more, and return us to being a net exporter as we were just 2 years ago; and, let the Keystone XL pipeline resume; and, expand domestic leases; ...

"Artificial" never works over time. Embracing reality is much more effective.

nate_meurer4• 4 years ago

Keystone XL is an oil pipeline. And our net export of gas has continued to increase in the past couple of years.

9887474• 4 years ago

The price charged by the US gas producers is maybe 10% of the resulting price in Europe. It's all about the transportation costs, liquefying the gas, and shipping it is very expensive.

reducesuffering• 4 years ago

Have we learned nothing from IBM contributing to the Nazi regime? https://en.wikipedia.org/wiki/IBM_and_the_Holocaust

Stop trading with murderers. Rally the people to conserve energy. Rally allies to shore up LNG (Liquefied Natural Gas) supply into Europe. Maneuver the subsidies so that the western world shows solidarity and stands united in sacrificing and sharing the burden. Putin invades because he thinks the west doesn't have the strength to cut gas. Reinstate when Russian attacks stop on Ukraine. Show him he's wrong and we have a much better chance at reversing this atrocity.

TehCorwiz• 4 years ago

Exactly right! And apartheid. All of humanity suffers when we sell our souls to people Like Putin.

hedora2• 4 years ago

Honestly, I'm surprised the Ukraine didn't respond to Russia's threats by moving demolition crews to the natural gas pipeline between Europe and Russia.

That would have drug NATO into the war, and probably acted as a deterrent.

rectang6• 4 years ago

the Ukraine

FYI: today "Ukraine" is preferred over "The Ukraine" because "The Ukraine" can be understood to imply a region rather than a country.

RugnirViking• 4 years ago

Yes. Specifically empymologically it stems from U meaning "at" and "krai" meaning border region. It makes sense especially right now why Ukraine would want to distance themselves from being called "the border region" (of russia)

cronix• 4 years ago

In that scenario, wouldn't Ukraine, a non-NATO country, be the aggressor against NATO? How would that deter anything? It seems that would turn NATO against Ukraine for threatening their energy supply.

cromka• 4 years ago

That would have drug NATO into the war

No, it wouldn't. Unless a NATO country is attacked, NATO cannot do anything. Individual countries can, though.

norswap• 4 years ago

Wow, they could still do this. Mind blown.

allisdust• 4 years ago

How did Europe not freeze to death during Cold war. It's not like it recently became cold there. I don't think this is about actual availability of Gas. It is about gas being cheap. If that is indeed the case, Germany in particular has to think hard on whther lives matter than money.

londons_explore2• 4 years ago

There is a process that can be used to turn coal into gas. It used to be common, but now is rarely used.

zajio1am• 4 years ago

Well, significant part of Europe was on the eastern side of the iron curtain, getting gas from Russia.

And note that in the past, home heating with coal (which is available locally) was common. We gradually moved from coal to gas for heating and now also for electricity generation, and that is something that cannot be reverted over one year.

retrac3• 4 years ago

How did Europe not freeze to death during Cold war

With Soviet gas. There was never a full Western embargo of the USSR, especially after detente. Trade directly between the USA and USSR averaged about $4 billion per year (1980 dollars) in the late 70s. Not large but also not insignificant.

In many ways the USSR was also a petrostate. Some, then and now, have argued this propped up the USSR beyond its natural life expectancy.

politician3• 4 years ago

Smaller population, too.

Symbiote• 4 years ago

How much difference would it make if everyone in Europe turned down their heating by 1°C? (Including e.g. electric heating in France or Norway, since the nuclear/hydropower can instead be used somewhere where electricity is made from gas.)

politician3• 4 years ago

Hopefully Europe begins to realize that starting to research proliferation-resistant Thorium nuclear reactors is worthwhile.

ClumsyPilot4• 4 years ago

We don't need to research and then design new reactors, that will take decades.

We need to mass produce and build designs we already have

politician3• 4 years ago

Online forums are full of misinformed high anxiety folks that are extremely anti-nuclear-anything. So, while I agree with you completely, I wanted my comment to last for longer than two minutes before being flagged and downvoted into oblivion.

onenukecourse• 4 years ago

I am NOT an expert. Just an amateur. But I doubt this.

Pro Forma: To anyone who gets upset, the following is not an opinion over the war either for or against. Just some thoughts from a random person who likes energy and is a geopolitical realist.

First the good news: Europe can wean itself off Russian gas, but only over the course of a decade or more. Specifically Europe would have to:

- Build nuclear power plants

- Build LNG plants

- Build coal plants (coal is easy to store, just a pile. This gives it massive strategic importance)

- Accept even higher energy prices

- Probably accept that CO2/GDP will go up. NatGas is very clean wrt to CO2 compared to coal.

- It's also not obvious that there is gas readily available to be LNGed. (See second list below)

All of these take ten years at best given the regulatory and political realities in Europe. They are also massively expensive and it's not obvious to me that the Europeans have much money left (a lot of that money is in Russia's state coffers). These are things Europe should have done ten years ago.

But it gets worse; the available supply in the short term is tragic for the EU:

- Russian gas that isn't piped doesn't have an LNG terminal (yet). It's therefore a massive hole in global supply. Therefore, the EU would be competing with Japan, Korea, India, etc for Qatari and Australian gas. Prices would increase massively and expect the Asian countries to get very aggressive to protect their supplies.

- The US has little LNG presence. This is because (I believe) until recently it was illegal to export nat gas. Therefore LNG terminals have to be built in the US.

- The export ban and lack of LNG terminals in the US has shielded nat gas users in the US. It's also, effectively, a massive subsidy to American industry. It's not obvious what political support exporting gas will have from the non energy-sector. Heavy industry needs gas and American's want to get back to "building things".

- Currently the US energy sector isn't benefitting from the high energy prices because production is tapped out due to lack of investment in the last five years. Specifically, the US' industry is not obviously sustainable (financially) and banks are getting shy. Expect them to get more shy if interest rates rise.

- On top of that there is a shortage of "shale sand" needed to extract shale oil. US gas is a byproduct of oil extraction.

- Keystone. Or the lack thereof. Oil and gas are somewhat exchangeable goods (in an expensive pinch, you can burn oil in many gas plants. You can also crack oil. The EU is in an expensive pinch). The more oil you make available into the market, the lower nat gas prices gets. Keystone is dead, limiting Canada's ability to export oil

So the EU is not in a good place strategically. How about the Ruskies?

I believe that Russia can more readily wean itself off of the European consumer than vice versa.

- Russian financial reserves are massive. Much larger with respect to her needs than the EU's gas reserves wrt to EU's needs. Look up Russian foreign reserves wrt to Russia's GDP. Remember, Russia only has to supplant 3% (?) of her GDP, not all of it. It appears to me that Russia can stay solvent far longer than EU can stay thawed.

- China is not going to stop buying Russian gas. Neither is India. Or Korea. Or Japan.

- Russia can have LNG terminals too. A short pipeline and a LNG terminal in Murmansk and a lot of the gas that would have gone to Germany can be shipped out.

- Russia has a lot of gas. Gas production requires continual investments. It appears to me that Russia's capacity to produce gas is not resource limited but capital goods limited. By redirecting investments (again, not financial investments, excavator time) to gas fields west of the Urals to those east of the Urals, Russia can tack east.

I'd love to have ppl comment on which ever of those points they disagree with.

danhor• 4 years ago

I think your take for solving this is somewhat wrong. The big issue isn't gas for electricity (only around 14% of gas in Germany is used for electricity) but gas for heating as well as industry, fertilizer and the likes.

This means the steps to solving this should begin with addressing those:

- Move heating systems away from gas (and oil). Heat Pumps are probably the best way moving forward.

- Moving the industry of gas and oil. Parts can probably be somewhat easily electrified, but parts like fertilizer and other chemical production probably should be converted to hydrogen. (Hydrogen generated from electricity, not gas, since that's a bit useless)

This means quite a bit more need for electricity where some of your proposals come in:

- Building nuclear power plants. Will probably take >15 years, so probably not helping much. Extending the runtime of existing plants might help, but I'm not sure how much.

- More coal. Will likely work. Capital costs are likely too high to use them instead of gas plants for filling gaps in renewable supply instead of investing in storage.

Some further important steps:

- Massive expansion of renewables. Very cheap and possible intermittency issues are likely not as important for producing hydrogen and gas. With sufficient overproduction and interconnection in europe the need for storage can be greatly reduced.

- Storage including Power to Gas. Meshes well with renewables. Especially Power-to-Gas will benefit from existing, then less used, infrastructure.

In general, LNG terminals are likely very helpful, especially for the next few years and high energy prices are probably going to happen.

I doubt that Russia can wean itself of Europe that easily. China won't be able to (fully) fill the gap (around 70% of russian gas is exported to europe) and is likely not that interested on heavily depending on foreign energy. LNG terminals are also very limited in capacity compared to pipelines and with europe switching more to LNG terminals a lot of new ships need to be built. Furthermore, if europe is successful in weaning off of fossil fuels, other countries are likely also going to reduce the need for gas due to scaling and learning effects (Renewables, especially solar, have seen huge cost reductions in the last 20 years and are killing of coal plants in Australia and electric cars are very likely going to kill of combustion engine cars in the next 10 years).

It's going to be very hard for both.

neilwilson2• 4 years ago

So Russia doesn’t provide the EU with any gas in a world systemically short of gas and that’s going to hurt Russia is it.

How exactly? They still have the gas and Europe has no fertiliser or heat.

Eventually mainstream economists will realise that you only export to import and that imports are a real benefit whereas exports are a real cost.

To win in international trade you want as many imports for as few exports as possible.

If Russia isn’t importing anything then it has no need to export at all.

There are plenty of jobs going making armaments and equipment for the Russian war machine, so nobody in Russia is going to be short of a job either.

Russia has no need of the West’s money. It has its own and can ensure people need to obtain it by imposing the necessary level of taxation.

Which if you don’t pay in roubles gets you a stretch in the gulag.

It really is time for some people to re-read Keynes’s “How to pay for the war”

adventured2• 4 years ago

Russia has no need of the West’s money. It has its own

The West can effectively devalue the Ruble, cripple their economy, and make them an economic pariah for generations. It would be possible to cut their economy in half in real-terms, even with China helping them.

The USSR was far mightier - both militarily and economically - than modern Russia and we economically contained them. We can break modern Russia if necessary.

And China? They're dealmakers and they will sell out Russia if presented the right deal, it's primarily a question of what they would want. The West and its affluent allies have more to offer China than Russia does by a factor of 20x.

It's possible to almost entirely isolate Russia if we need to do it.

9887474• 4 years ago

I think GP's point was: Devaluating Ruble could cripple Russian economy only if they imported a lot, which they don't. They are self-sufficient, they have all the natural resources on their territory, and they have manufacturing capabilities to produce everything they need, they do not need any trade with the rest of the world. Also, Russian people are used to being poor, so it's not like they will rebel because of getting even poorer.

type0• 4 years ago

And China? They're dealmakers and they will sell out Russia if presented the right deal, it's primarily a question of what they would want.

No, they want Taiwan and US wouldn't consider that. China wouldn't sell out Russia for anything other than World domination, they are Chinas only friendly big neighbor and their best companion against the US.

neilwilson2• 4 years ago

"It's possible to almost entirely isolate Russia if we need to do it."

And how is that a problem for Russia. They are self-sufficient in everything they need.

lumost2• 4 years ago

The Soviet Union and modern Russia buoyed their economies and national programs through gas exports.

If Europe stops buying Russian gas, then there is only so much they can ship to china through existing infrastructure. Worse Europe may block the transit of Russian gas through their borders.

This would be a lose lose situation for everyone, but It’s a test of European and eventually American will to do without vs the Russian governments failure to pay its obligations. How long will the oligarchs tolerate austerity for Ukraine?

CyberRage• 4 years ago

If you look strategically Russia is in trouble, their economy is brittle and heavily relies on fossils, the same fossils the west is phasing out for "clean" alternatives.

Fuel dependency will definitely drop in the coming decade, what Russia has beyond it?

MattGaiser• 4 years ago

So Russia doesn’t provide the EU with any gas in a world systemically short of gas and that’s going to hurt Russia is it. How exactly? They still have the gas and Europe has no fertiliser or heat.

Logistics for one thing. Where/how are they going to sell that gas? Western Canada has plenty of gas too. It cannot be used to supply Europe because of logistics.

zelphirkalt• 4 years ago

And yet Russia would not get that money for their gas, which they seem to have in abundance, if they did not export it. All their surplus of gas would not get them anything.

Russia may be able to do its own thing inside Russia for a long time, but in the meantime the world moves on and leaves them behind. It would be unwise of Russia to let it come to this. But then again a madman is a madman ...

Friday_• 4 years ago

EU should not be pushed like that. Into shooting itself in a foot.

dylan604• 4 years ago

Russia shouldn't be rewarded for one second longer for their bullshit either though.

chiefalchemist• 4 years ago

I won't dispute the analysis, only because propaganda is hard to prove wrong. And that's the problem here, It's on sided.

It's no secret many of the economies in the West are so-so (from Covid). What short term impact will these sanctions have on the countries issuing them? What about longer term (e.g., The Fed over-compensates).

In a global economy, these sanction actions have international reactions.

ClumsyPilot4• 4 years ago

The West could win the war in Ukraine in three moves:

1. Provide any deserting Russian soldiers with refugee status and $3,000 in cash

2. Enable willing fighters from accross the world to reach Ukraine to defend it

3. Provide Ukraine with real SAM systems like patriots

Thats it, thw war would be over in a week without NATO firing a single bullet.

gabea• 4 years ago

What makes you so sure?

ClumsyPilot4• 4 years ago

You can never be sure, we were sure afghan army will hold and we were sure Ukraine wouldn't last long, and the opposite happaned.

The logic is that this war is as close as it gets to 0% approval, and many soldiers arent happy aboit either. If they had a way to avoid killing their 'slavic brothers' that does not lead to being stuck in a gulag, a significan portion would take it. I am not sure how much money theid need, but compared to cost of a war, this is cheap. Kremlim would be bleeding manpower.

user3939382• 4 years ago

We could win the war in Ukraine by agreeing to permanently keep Ukraine out of NATO which is a fait accompli anyway since the member nations have already said they’re not going to war with Russia over Ukraine.

hawk_• 4 years ago

Yielding to terrorists sets bad precedent. Where does it stop?

ZeroGravitas• 4 years ago

That's a strange definition of "win". Thats like saying you could win a mugging by handing over your wallet after they hit you with a baseball bat.

caseysoftware• 4 years ago

The West could win the war in Ukraine
without NATO firing a single bullet

"Not technically NATO" but "organized by NATO-member countries" is an exceptionally dangerous line to tread.

rectang6• 4 years ago

NATO "firing bullets" is not and has never been on the table since NATO is a defensive alliance and Ukraine is not a member.

The idea of bribing Russian soldiers radically underestimates the brutal control exerted by the Kremlin over the Russian people. It also sells the Russian people short, implying individual corruption when many are patriots who oppose war against their Ukrainian cousins but are not able to speak out.

The idea that bringing in freelance freedom fighters is going to end the war "in a week" is facile and ludicrous.

This post is unserious and offtopic.

ClumsyPilot4• 4 years ago

You are not bribing the soldiers, you are providing a way out of war they don't want that does not end in a jail cell. The money is not a bribe, it's something to be able to start a new life

Gas Embargo Would Hit Russia Hardest

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