Russia is Winning the Energy War

The Russian Federation is a commodities superpower. Among the biggest industries in Russia is its natural gas and oil production. Fears of "global warming" and the purported culpability of the fossil fuel industry aren't front-and-center in the Russian mind as they are in the minds of so many in the West. Russia is the third-largest producer of crude oil in the world, with 11 percent of total world output. The oil and gas sectors represent 42 percent of the total capitalization of the Russian stock market. It's not to be taken lightly.

Russia's economy does well when the global price of oil is higher than historical norms. What's more, their war machine grows stronger, the higher the global price of fossil fuels gets. When the Russians invaded Ukraine in February 2022, the West immediately responded by slapping Russia with onerous sanctions. The Western elites believed the late senator John McCain's quip that post-Soviet Russia was little more than a "gas station masquerading as a country." If that was true, then depriving Russia of its clients in the West would break the back of the Russian economy and, by default, force Russia to prematurely end their war in Ukraine.

After two years, the data is in. The Western elites -- and, as usual, McCain -- were wrong. In spite of its slow slog against the Ukraine -- but also in part because of it -- Russia's economy is stronger today than it was before the war.

This is due in large part to the way that Russia's innovative economists have figured out how to evade Western sanctions on their most precious commodity: fossil fuels. Sure, the Russians took a hit in the early days of the war when their clients in the West effectively cut them off without warning. But that didn't last. And not even the spontaneous combustion of the Nord Stream pipelines linking cheap Russian natural gas with a natural gas-hungry Europe in the fall of 2022 could damage Putin's economy.

Hmmmm....

The developing world, unlike the West, has no compunction about purchasing excess Russian natural gas and oil at discounted rates. China and India lead the global South in turning Europe's loss into their gain. The West is virtue signaling over the Ukraine War by starving itself of vital energy sources. Meanwhile, the global South is coldly protecting its economic interests by seeking affordable energy, regardless of where it comes from.

Even some European countries. like Hungary, have purchased a whopping $343 million of oil and gas from neighboring Russia, as of February of this year.  More Russo-skeptical nations in Europe, such as the Czech Republic and Slovakia, continue to trade for these goods with Moscow (although these two nations are slowly reducing their dependence on Russian energy sources). Germany, once the economic center of Europe, is in decline. By cutting itself off from cheap Russian energy sources, the cost of all goods have spiked, dragging the German economy -- and the people -- down. The Greens in Germany, meanwhile, have exacerbated the problems by forcing a costly and ultimately futile transition to less effective alternative energy sources.

And don't even think about American fossil fuel as a replacement for Russian energy. It's more expensive to ship those resources across the Atlantic Ocean than it ever was to pump the energy from Russia into Europe via pipelines.

In sum, Russia's economy is humming along while Europe's is in decline. NATO now looks increasingly more fragile than Russia as a result. Thus far, you might even say that the Russians have beaten the West in the energy war.