Mythology, Nukes, Oil, and Fear

“We proceed from the fact that there can be no winners in a nuclear war and it should never be unleashed, and we stand for equal and indivisible security for all members of the world community.” 

Vladimir Putin, August 1, 2022

“Russia has announced that not only mobilization capabilities, but also any Russian weapons, including strategic nuclear weapons and weapons based on new principles, could be used for such protection.” 

 Dmitry Medvedev, former Russian President & current Deputy Chairman of Russia’s Security Council, explaining Putin’s statement on September 21st, that he would use “all available means” to protect Russia’s “territorial integrity,” including newly annexed territory.

In theory, the notion of “mutually assured destruction” should cause nations possessing nukes to follow Putin’s first quote above. There are a lot of nukes in the world. Russia has 5,977 nuclear warheads, the U.S. has 5,428, China has 350, France has 290 and the United Kingdom has 225, according to the Federation of American Scientists. North Korea, India, Pakistan and Israel are also nuclear weapons nations. But recently, the thought that using tactical nuclear warheads might be acceptable on the battlefield has surfaced more than once, particularly as noted in the Medvedev quote above. While less powerful than a strategic nuclear armed missile, a tactical nuclear weapon can still be stronger than the bombs used in Hiroshima and Nagasaki… just more narrowly targeted.

Addressing the variables in the viability of Russia’s using nuclear weapons in the Ukraine war, in an interview on Fareed Zakaria’s Global Public Square telecast (CNN, October 10th), US Army Gen. Wesley Clark, a former NATO Supreme Allied Commander in Europe, asserted that instilling fear was Putin’s primary threat in his nuclear saber-rattling. However, he also noted that NATO had run myriad computer simulations on the use of a more limited tactical strike(s) as part of a realistic road to victory. Clark found that while casualties were monstrous and radiation poisoning remained in and around targeted areas, there were no scenarios where using such tactical nuclear weapons produced victory.

As Donald Trump is now mentioning in all of his recent rallies, he would end the Ukraine war if he were president (by forcing Ukraine to accept peace by pulling back US aid)… and take the world out from under Putin’s threat to use nuclear weapons. First, there is little doubt that Ukraine would not stop fighting under any circumstances, or that our new NATO allies (Sweden and Finland), as well as the Baltic Republics, would be exposed to Russian expansionism under the same “threat.” Putin would then know that his threat could be used repeatedly to advance his territorial ambitions. The threat is real.

At any level, using nuclear weapons is a “no-win” effort. But that may not stop a cornered despot, with no checks or balances in his political system, from exploding like a cornered tiger, lashing out without regard to the consequences. Putin faces Ukraine’s successful pushback in territories he thought he had annexed… plus an embarrassing bomb on a critical Russian bridge. His fierce retaliation against Ukraine changed nothing, perhaps even amplifying Ukrainian resolve. His inexperienced, newly mobilized and demoralized troops are unlikely to make a difference.

Reality does not stop the world from financing Putin’s war, sanctions notwithstanding. Aside from the approximately $1 billion/month that the United States spends on Russian imports – see my September 4th Wanna Buy a Yacht… or Some Plywood? blog – Russia is a powerful beneficiary of the soaring price of oil and gas resulting from those sanctions. $1 billion/day in sales.

To compound this essential financial system that very much funds Putin’s war against Ukraine, Saudi-led OPEC+ (which includes Russia) just announced a 2 billion barrel a day curtailment in oil output, citing falling prices that are hurting their profit margins. But the bigger, hidden issue behind this move is the threat by Western nations to place a statutory cap on the price of oil they do import, and although Russia is the target, all oil producers would suffer. A non-starter to our Saudi “ally” and other OPECers. Just as Biden is seeking wider support for Democrats in the mid-terms, this little price hike/supply contraction slam is most inopportune.

Indeed, there are two sources of oil that could make a difference: Iran and Venezuela. But Iran just might be in the middle of a revolution. Our allowing them to export freely to solve our oil price problem just might be the kind of support that repressive government needs to stay in power. While Venezuela now has an unrestricted right and ability to export as much oil as they want, their failed leftist government has allowed the necessary extraction and refining infrastructure to decay so badly that it would take massive investments and several years to get that country “fixed” enough to make a dent in global oil supplies. What about us?

Do we really want to tap our national reserve even more than we have already to lower the price… as significant risk as the Russia war rolls on? For those idiots who say that the government should take all restrictions off of American oil production, Big American Oil (and gas) staunchly maintains that they are producing as much as they physically can. Climate change deniers are instead using price disruption from Putin’s war as an excuse to kill as much support for alternative energy power generation as they can. There no near-term ability to produce more US oil.

Indeed, as the above chart illustrates, as a result of recent government releases of oil into the marketplace to reduce prices at the pump, our US Strategic Petroleum Reserve (SPR) has not been this low for decades. Created as a reaction to the 1973 oil embargo, “[o]ver time the U.S. government began to fill the reserve. At its high point in 2010, the level reach 726.6 million barrels. Since December 1984, the level has never been lower than 450 million barrels — until now… On March 31, 2022 — in an attempt to fight higher oil and gasoline prices — President Biden announced the release of one million barrels of crude oil a day for six months from the SPR.

“[According to Forbes Senior Correspondent, Robert Rapier:] I remember when I first heard about it, I thought ‘Wow. That’s a lot.’ In fact, I noted in interviews at the time that this level of release would likely help stem oil prices — at the risk of depleting our insurance policy in case of a supply disruption… Consider that with the U.S. producing 12 million BPD [barrels per day], an extra one million BPD pushes total U.S. ‘supply’ (which isn’t sustainable, because it relies on depleting the SPR) back up to the all-time pre-Covid high of 13 million BPD.” Forbes, September 7th. This latest “price shock absorber” release from the SPR has totaled about 200 million barrels; but the risk of releasing more into the marketplace carries significant national security risks. An easier solution, if legislatures and Congress can be persuaded, would be to levy a windfall profits tax on Big Oil. After all, their profits from this nasty price rise have almost tripled. Brace, brace, brace!

I’m Peter Dekom, and war always causes pain and disruption… but when global tyrants are not confronted and contained, the longer-term pain can be so much worse.