Russia / Europe / U.S. and the Oil and Gas Problem
The U.S. and E.U. allies would like to cap Russian oil and gas prices and thereby limit Russia’s war profiteering from a war it started. Russia is trying to forestall this possibility by threatening to cut Europe off from Russian oil and gas completely. The two sides seem to be setting up a game of chicken. To prevail in this struggle, the West should not just rely on successful bluffing, they should show Putin that they have better cards to play than Putin thought they had. The only way to improve the West’s cards fast enough in the short time remaining before winter sets in would be to act in a way that is appropriate given the gravity of the situation, which would be to go on a wartime footing as the allies did in World War II, including instituting rationing, price controls, excess profits taxes, and incentives to lower domestic oil ad gas consumption and accelerate development and distribution of alternative sources. The West needs to demonstrate its resolve instead of pretending that it can prevail on a business-as-usual basis. Unfortunately, there are two many moving parts and political obstacles for this to happen. We’ll have to do the best we can under the circumstances and hope things work out.