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“It is wartime,” Tatiana Mitrova, a research fellow at Columbia, told her colleague Jason Bordoff, a former adviser to Barack Obama, on an eye-opening recent episode of the podcast “Columbia Energy Exchange.”
“This is something that European politicians and consumers didn’t want to admit for quite a long time. It sounds terrible, but that’s the reality. In wartime the economy is mobilized. The decisions are made by the governments, not by the free market. This is the case for Europe this winter,” she said, adding that we may see forced rationing, price controls, the suspension of energy markets and shutdowns of whole industrial sectors. “We are not actually talking about extremely high prices, but we are talking about physical absence of energy resources in certain parts of Europe.”
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For all the talk about high gasoline prices and the rhetoric of Putin’s energy price hike, Russia’s oil exports have not fallen very much. If that were to happen — either because the U.S. and Europe forced oil to come off the market to put economic pressure on Putin or because he takes the oil off the market to hurt all of us — oil prices go up enormously.
To, like, $200 a barrel, right?
I mean, it depends how much he takes off the market. We don’t know exactly. If Russia were to cut its oil exports completely, the prices would just skyrocket — to hundreds of dollars a barrel, I think.
That’s because there’s just no extra supply out there today at all. There’s a very little extra supply that the Saudis and the Emiratis can put on the market. And that’s about it. We’ve used the strategic petroleum reserve, and that’s coming to an end in the next several months. There’s just no extra cushion in the oil market right now.
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