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"Despite?" I thought the EU payments to Russia were propping up the war. On the other hand, hydrocarbons are a global commodity. If EU bought from somewhere el
by adolph 2y ago
"Despite?" I thought the EU payments to Russia were propping up the war.
On the other hand, hydrocarbons are a global commodity. If EU bought from somewhere else, then Russian methane would just substitute for whoever would have bought from that somewhere else. Buying from somewhere else just increases costs through use of less efficient transportation than whatever pipelines remain.
And on that same other hand, hydrocarbon extraction isn't free revenue for the Russian state. Unless Russia is willing to go the way of Venezuela and starve its golden goose, the total free revenue is probably something similar to the profit margin of an oil company[0], which is pretty volatile. If an average margin is 20%, EU's 21.9B of fuel purchases is more like 2.4B of Russian govt support compared to 18.7B to Ukraine.
0. https://www.investopedia.com/ask/answers/012015/what-average-profit-margin-company-oil-gas-drilling-sector.asp https://www.investopedia.com/ask/answers/012015/what-average...
- blululu 2y agoThis is a good point but also Russia is a nation state not a company. The 80% of the revenue spent on operating costs is just invested in their economy and creates jobs and pays taxes. For a state enterprise, the balance sheet is very different than a private company.
- adolph 2y ago> The 80% of the revenue spent on operating costs is just invested in their economy and creates jobs and pays taxes. Yes and also not the full 21.9B claimed by the article. I wonder how one could contemplate the different levels of external war that could be exerted by a country based on its external economic ties. One the one hand is going full juche with no external economic ties (which the DPRK isn't quite), and on the other is some fully external state run on banking or tourism like Liechtenstein or Maldives.