Matt Yglesias has an excellent post discussing how US energy policies often work at cross purposes. Many administrations wish to reduce energy exports from enemies such as Russia, Iran and Venezuela, but not too much to harm the global economy. Administrators may also wish to reduce domestic renewable energy production to combat global warming, but not so much as to harm the economy.
Yglesias points out that a potentially successful policy adjustment could ease domestic energy regulations enough to increase production by X barrels a day, while simultaneously tightening sanctions enough to cap rising US production. It is a smart way to tighten sanctions without any significant impact on the environment or the global economy. (Of course, these types of policies always have second-order effects, but the first-order effects will decrease significantly.)
I have nothing new to offer, but I can point to the same problem of conflicting goals inside penal system. From experience, we have learned that sanctions are often easy to evade. In accordance with the NYTRussia has found ways to export oil to places like China and India.
[As an aside, if you rely on certain parts of the American media you might not know that it was India that threw Russian the financial lifeline.]On the other hand, sanctions have others result, and Iranian oil exports are likely lower than they would be in an unrestricted market, especially since sanctions also prevent the transfer of technology to develop new oil fields.
Let’s assume that Russian energy sanctions were able to reduce output by a small amount, let’s say less than 10%. If so, the most effective way to deprive Russia of funding for its war would be a very low global oil price. But sanctions on Iran and Venezuela tend to push up global oil prices, giving a boost to Russia’s economy.
Of course when there is a conflict of this nature, there are no easy answers. But we can make a conditional observation. If Russia’s invasion of Ukraine is the country’s greatest threat, then the case for punishing other oil producers becomes weak.
In summary, when a foreign policy organization is considering actions against any of our enemies, it is important to consider how the actions may indirectly affect the global market for commodities such as oil, as well as how these actions will affect the behavior of others. enemies. Foreign policy conflicts cannot be analyzed in isolation, as the global economy is highly interconnected.
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