The War Party parties in Aspen — at the rest of the world’s expense,

Andrew Cockburn, Washington editor of Harper’s Magazine

[…] The second part of Adeyemo’s master plan consists of an already widely bruited scheme to limit Putin’s oil revenues by using western dominace of the marine insurance market. The price at which Russia could sell its oil would be set at a level that would allow a small profit, but no more.  Only tankers carrying oil priced at that level would get insurance. “That is a way to reduce their revenue,” Adeyemo announced confidently, promising that the plan would be in operation by the end of the year.  The fact that the Treasury is still promoting the scheme as a key element of Washington’s master plan to bring Putin to his knees shows how detached from reality Washington has become.  Various specialists who understand the oil market rather better than Adeyemo and whoever else is pushing the scheme have detailed its shortcomings. Among the clearest is Christof Rühl, senior research scholar at the Center on Global Energy Policy at Columbia University, and  formerly chief economist at BP. As he explained in a podcast interview with the energy business news site BNE Intellinews soon after the price cap plan was first  disclosed, it will not work, because, quite simply, “oil is fungible.”

Unlike gas, it is not largely dependent on pipeline distribution, but can be moved anywhere on ships. Therefore, rather than submit to the price cap regime, the Russians would simply direct more exports to Asia where, crucially, there is competition among “a whole plethora of buyers, including India, who would all bid against each other,” thereby driving up the price the Russians would receive for their oil.  If the Russians were still dissatisfied with the price they were getting, all they would need to do would be to reduce supply. As Adeyemo should understand, less oil means higher prices – including to the U.S., since the Indians, who have vastly increased their imports of Russian oil, are busy refining it and selling not only to Europe, but also, according to Rühl, the U.S.  Furthermore, the Indian government has recently certified the entire Russian tanker fleet, making it eligible for Indian insurance coverage. As fellow panelist on the podcast Chris Weafer, CEO of Macro Advisory, exclaimed of the western economic warriors, “what planet are they living on?”

The same query might be applied to the happy conferees at Aspen. Läs artikel