The Genius Way The US Could Hurt Russia And Help You At The Same Time

Illustration for article titled The Genius Way The US Could Hurt Russia And Help You At The Same Time

Russia is invading Ukraine right now, that much is fact. The United States doesn't really like that, but there's not much it can do short of starting a costly war. One idea that could actually work to hurt Russia does have an unintended side effect, though – it can make your drive way, way cheaper.


So far, President Obama has promised unspecified "costs" if Russia doesn't back down from what amounts to basically an opportunist grab, but short of actually using an Ohio-class submarine for its intended purpose, there haven't been many ideas that have been taken seriously. Boycott Russian natural gas? Most of Europe is still dependent on it. Ban the sale of Ladas? Most people won't really care.

But one idea, which was first floated by economist Philip LeVerger and spotted by Steve LeVine over at Quartz, is absolutely palm-rubbingly genius. Russia's economy is heavily dependent on sales of oil, and if you could push the price down, you can inflict some pretty significant economic damage.

But if only there was some way to do it. Maybe involving vast storage tanks in Texas and Louisiana? Take it away, Steve:

The tool is the US Strategic Petroleum Reserve, the 700-million-barrel underground cache of crude oil waiting in Texas and Louisiana for a rainy day. In an overnight note to clients, Verleger argues that if the US were to ship just 500,000 barrels a day of oil onto the market, it would drive down prices by about $10 a barrel and cost Russia about $40 billion in annual sales.


This one little trick alone would be enough to take a serious chunk out of the Russian economy, Verleger posits, up to 4% of the country;'s Gross Domestic Product, which is a lot. And since the Strategic Petroleum Reserve currently holds about 700,000,000 barrels of oil, we could keep doing it for a while.

At the same time gas gets cheaper for you at the pump. It's a win-win, for the average American that likes tasty gasoline and doesn't like seeing Russians invade random countries. Huzzah.


Obviously, it's not as simple as flicking a switch. President Obama would also have to consider that he'd be hurting the American oil industry at the same time, and Saudi Arabia, our Good Friends And Partners™, would have to agree to go along with this as well. Not to mention the also heavily oil-dependent Canadians, and after seeing those guys in Olympic Hockey, it might not be such a good idea to piss them off.

While this sort of thing has never been attempted before as a tool solely of economic warfare, LeVine notes that it does have precedent. In the 1980s, Saudi Arabia was looking to increase its share of the oil market. So they just pumped a lot more oil.


This had the side effect of making the price of petroleum plunge, and subsequently put the then-Soviet economy into a nosedive. Which helped with the whole getting-it-to-collapse thing.

So how likely is this to happen? I honestly have no idea. If you asked me how likely it was that Russia would be invading Ukraine six months ago, I'd probably say it was a very small one indeed. So I wouldn't rule anything out.


At the same time, this would probably be a lot easier, in terms of international politics, than enacting actual sanctions on the Russian economy. President Obama could just make up some crap about "helping the average American" and let the oil flow, just like President Putin is making up crap about "protecting Russian interests."

Because hey, if we're doing this sort of game, we might as well let the average consumer win.


Photo credit: Flickr user upupa4me


I don't understand the sudden drive to condemn Russia for providing military aid against radicals in the Ukraine. They were asked to help maintain order, they are not invading. What the fuck are you doing posting political bullshit on a fucking car blog anyway? get your shit straight, hack. Cars, not biased politics. simple? good.