LARRY KUDLOW: Biden's Green New Deal radical climate obsession paid off for Putin
Kudlow reacts to Biden's energy policies
With all the hoopla surrounding President Joe Biden's trip to Poland and his surprise visit to Kyiv to meet with President Zelenskyy and then more bravado from Vladimir Putin, including dropping out of the SMART Nuclear Treaty with the U.S., and of course the Chinese foreign minister insulting U.S. Secretary of State Antony Blinken and then sucking up to Vladimir Putin, one issue that no one seems to be talking about for the moment is oil. So, let's talk about oil.
Joe Biden hates oil. Vladimir Putin loves oil. Xi Jinping loves Putin's oil. Remember all the sanctions from the U.S., EU, NATO, sanctioning the Russian central bank, sanctioning the Russian oil producers, bank lenders and insurance companies around the world? Remember all that? Well, guess what? Russia today is still selling roughly 10 million barrels of oil per day and that is basically what they were selling a year ago.
How is this possible, you might ask? Well, it's a good question. It may be unanswerable. Sanctions really haven't worked, but, for sure, China and India have been buying up any Russian oil production slack created by reduced European demand. That's our great friend India, remember?
I don't know what the U.S. numbers are. I sincerely hope they're way down, but here's a thought. I think it’s an important thought. With Russia still selling 10 million barrels a day and the basic ballpark oil price being $80 per barrel, that makes $800 million a day from oil sales and there's 365 days in a year, so that comes to $292 billion for the year.
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That's enough to fight a war, even if your army is terrible and even if you're bungling the war left and right, you still have $292 billion, much of which by the way is probably skimmed off the top and stolen by Putin and his cronies. Now, consider this.
The United States, for the three years pre-COVID under former President Donald Trump, the average price of oil was about $60 a barrel. If that were the selling price for Putin's 10 million barrels a day that comes to $600 million, times 365 days in a year, that comes to $219 billion for the year. So, let me complete the exercise.
At today's $80 at which Putin gets $292 billion, versus the $60 price several years ago at $60 billion where Putin would be getting $219 billion, Putin has made a tidy profit of $73 billion for the year.
In fact, the oil price got well over $100 a barrel at the time of Putin's invasion of Ukraine, which greased his pockets and his war machine ever more, but let's stay with the current quotes. That $73 billion profit means that Putin is playing with house money, but it's our U.S. House. Putin just stood there and watched it happen and of course fought a war and of course probably stole a good chunk also.
Now, consider Joe Biden, who hates oil. If he weren't waging war against oil, various petroleum products and all fossil fuels, we might be producing 14 or 15 million barrels a day right now, instead of roughly 12 million barrels. 14 or 15 million barrels a day were the estimates from the U.S. Energy Department a couple years ago. That was right before COVID. We were at the time over 13 million barrels a day.
I am just going to make a guess, a pure guess! I'm going to suggest that if the world price of oil, if we were producing 14 or 15 million barrels a day, the world oil price would probably come in someplace close to $50. Just a guess, but I don't think it would be $80 and I think it's a pretty good guess it wouldn't be $100.
So, Joe Biden's Green New Deal radical climate obsession and the global petroleum politics that go with it, has really paid off for...wait a minute… hang on a second… Vladimir Putin and his war against Ukrainian freedom.
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Could Putin fight a war at $50 a barrel? Maybe, but that's not his history. His history is that when oil hit $130 a barrel in July 2008, Putin filched a big chunk of Georgia. When oil crossed above $100 a barrel in February 2014, Putin picked off Crimea and, roughly a year ago, with oil above $100 a barrel, Putin invaded Ukraine. Moral of the story? Putin likes high oil prices. Doesn’t he?
Second moral of the story: Why is the Biden administration helping him with high oil prices? Third moral of the story: Reopen the fossil fuel spigots here in the U.S. It could save Ukraine and it will surely be "America First" again!