The Ukraine War Just Screwed Tech and Energy
Get ready for a summer full of skyrocketing energy costs, chip shortages, and less than savory compromises
English folklore has it that the abbey church of St. Peter sold off its assets to pay for repairs to St. Paul’s Cathedral, thus originating the phrase “robbing Peter to pay Paul.” As a colloquial expression, Americans often use the phrase to describe the idea of paying off one debt only to incur another. It’s kind of like people who have revolving credit cards where they keep a consistent balance, but then move it to a new card before the higher interest occurs. But given enough time, the ruse always ends in disaster, and brings us to events unfolding inside Russia and Ukraine.
In a previous analysis, I explained Russia’s “reasons” for invading Ukraine and the geopolitical ramifications for Europe and the West (If you haven’t, I recommend reading that first). However, as multiple Ukrainian cities continue to be razed by Russian forces, many have wondered what to expect. How does it affect the world? The United States? Given that oil prices appear to be at the forefront of everyone’s mind in America, let me start by ripping the band-aid off — we’re screwed.
Consider the following: we’ve currently sanctioned — or have strained relationships with — Iran, Saudi Arabia, Venezuela, and now, Russia. Each country is a major world oil exporter. Given the war in Ukraine, we’re about to watch 5 million barrels of Russian crude go offline, with gas prices in the United States already hovering around $4.00 per gallon. Saudi Arabia and the United Arab Emirates have rejected the Biden Administration’s calls to ease surging oil prices despite boasting spare capacity. So either the Biden Administration makes some deals with the devil, or we choose the nuclear option: we shut off oil exports to the rest of the world in order to stabilize American gas prices.
In the 2015 Omnibus bill that President Obama signed into law, foreign markets got access to producers and traders of U.S. crude oil for the first time in 40 years. This increased profits for the oil and gas industry, but here’s the catch — any U.S. President can cancel all crude exports…