Thursday, December 9, 2021

Putin and oil

There is concern that Russia is preparing to invade the Ukraine. Russia gets a ton of money from oil exports and things have been looking up for the past 10 months. Russia exports 8 million barrels of oil per day and when Biden took office oil was $47 and today it is $77 or $30 per barrel more. This means Putin is bringing in an extra $240 million dollars per day. US production declined and the price rose, the old supply and demand thingy. The question arises, did this extra income give Putin the impetus to make the move. This rise in oil prices has caused gasoline prices in the US to rise from $2 per gallon to $3. If the US would announce an increase in production the price of both would come down and this would help US consumers and hurt Putin. US oil companies are happy with the higher price as the US produces 11 million barrels per day and this $30 increase gives them an extra $330 million per day.

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