This post is for all my friends in Europe that their countries depend on Russian oil and gas.
By now most Europeans have heard the ban of Russian oil and gas….and I would imagine the question on their minds is …..how will we cope with this loss of resource?
Well the EU has a plan to help out with this situation……
Some 25% of all oil imports to the EU came from Russia last year. European Commission President Ursula von der Leyen is ready to take that figure down to zero. Von der Leyen on Wednesday proposed a total ban on Russian imports to the EU as part of a sixth package of sanctions, under which crude oil would be banned within six months and refined products by year’s end. What you need to know:
- Context: Most of the oil the EU gets from Russia is used for gasoline and diesel for vehicles (14% of the EU’s diesel comes from Russia), reports the AP. That could make trucking even more expensive. This proposal doesn’t touch natural gas, which is used to heat homes and generate electricity. The EU gets about 40% of its natural gas from Russia, and alternatives are tougher to find.
- Von der Leyen’s standout lines: “Let us be clear: it will not be easy. Some member states are strongly dependent on Russian oil. But we simply have to work on it. We now propose a ban on Russian oil. This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined,” she said, per the Guardian.
Next steps: The Wall Street Journal reports all 27 member states will need to give the proposal the OK. A decision is being sought within the week.
The asterisk: Under the proposal, Slovakia and Hungary would get an extra year to wean themselves fully off of Russian oil due to their current dependence on it. But the BBC reports Slovakia’s economy minister is seeking a three-year period to do so, and the New York Times quotes Hungary’s foreign minister as saying, “It is physically impossible to operate Hungary and the Hungarian economy without crude oil from Russia.”
Oil prices: Predictably, they jumped. Prices were up more than 3% on the news. The Journal notes it’s unlikely that every barrel the EU were to refuse would find a home elsewhere, meaning the global supply could shrink.
Yellen’s concern: The Journal points out that US Treasury Secretary Janet Yellen in early April pointed out the likelihood that a full ban could cause prices to soar; that could soften the blow of the lost EU revenue and lessen the impact of the sanctions on Russia.
That EU revenue. The Guardian cites calculations by NGO Europe Beyond Coal, which estimates the EU has paid roughly $22 billion to Russia for oil since the start of the invasion.
My question for my European visitors….does this plan solve anything? Is it a sound plan? Or is it a band-aid?
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