In December 2006, The Economist magazine published a cover drawing of Russian president Vladimir Putin, dressed like a 1930s gangster in a dark suit and fedora hat, under the headline ‘Don’t Mess with Russia’. Putin held a gasoline nozzle, gripping it like a machine gun. The target presumably was Europe, which relied heavily on Russia for oil and natural gas.
The cover story’s subheading asserted, ‘Russia’s habitual abuse of its energy muscle is bad for its citizens, its neighborhood and the world’. Today that assertion still rings true with Russia’s cut-off of natural gas deliveries to Poland and Bulgaria.
As an energy scholar who has lived and worked in Europe, I know that gas is a precious commodity that is critical for industries, power generation and heating buildings – especially in northern Europe, where winters can be harsh and long. This explains why European nations import gas from many sources, but have grown to depend on Russian supplies to keep their homes warm and their economies humming.
From oil embargoes to gas cutoffs
The energy weapon can take many forms.
In 1967 and 1973, Arab nations cut off oil exports to the US and other Western nations that supported Israel in conflicts against its Middle East neighbours. Withholding supply was a way to inflict economic pain on opponents and win policy concessions.
Today, an oil embargo might not work as well. Oil is a fungible commodity in a global market: If one source cuts off shipments, importing countries can just buy more oil from other suppliers, although they may pay higher prices on spot markets than they would have under long-term contracts.
That’s possible because more than 60% of the world’s daily oil consumption is delivered by ship. At any given moment, a flotilla of seaborne vessels is carrying crude oil from one point to another around the globe. If there are disruptions, the ships can change direction and get to their destinations within a matter of weeks.
As a result, it’s hard for one oil-producing country to prevent a consuming country from buying oil on the global market.
