By John Helmer, Moscow
@bears_with
The propaganda war to make pinprick drone attacks on Russian oil refineries and oil storage terminals appear to be destroying the Russian economy, and Ukrainian forces winning the war, came to its climax last week, on September 23, when an announcement was issued in President Donald Trump’s name.
“When the people living in Moscow,” the tweet said, “and all of the Great Cities, Towns, and Districts all throughout Russia, find out what is really going on with this War, the fact that it’s almost impossible for them to get Gasoline through the long lines that are being formed, and all of the other things that are taking place in their War Economy, where most of their money is being spent on fighting Ukraine, which has Great Spirit, and only getting better, Ukraine would be able to take back their Country in its original form and, who knows, maybe even go further than that! Putin and Russia are in BIG Economic trouble, and this is the time for Ukraine to act.”
Trump kept repeating his jingle to everyone he met. He told French President Emmanuel Macron that “it could be that Russia is a paper tiger. I don’t know what they are, but three and a half years of fighting and killing everybody and killing 7,000 people a week for nothing, for nothing.”
Two days later in the White House Trump said: “I’m very dissatisfied with what Russia is doing and what President Putin is doing. I haven’t liked it at all. He’s killing people for no reason whatsoever. And they are doing — they are doing very poorly considering they — they have put it all out on the line. They are — their economy is going to hell. They’re bombing the hell out of everything, and they’re picking up very little territory, if any. In fact, they’re losing some territory. So uh, I think it’s been very bad for the reputation of Russia.”
In their meeting at the UN immediately following after Trump’s tweet, Secretary of State Marco Rubio and Foreign Minister Sergei Lavrov ignored what had been published. Rubio’s communiqué said he had “reiterated President Trump’s call for the killing to stop and the need for Moscow to take meaningful steps toward a durable resolution of the Russia-Ukraine war.” Lavrov said they had “exchanged views on the settlement of the Ukrainian crisis in the development of the understanding reached during the Russian-American summit in Anchorage. Reciprocal interest in finding peaceful solutions has been confirmed.”
The reference to the “understanding” between the presidents at Anchorage was the Russian reminder that Trump appeared not to be remembering what he said he understood five weeks ago.
Later, in his exchange with reporters, Lavrov was asked “given the ever-changing policy of American colleagues, how does Russia plan to work with the United States?” Lavrov confirmed “this can be called an ever-changing, flexible policy”. But he played down the significance of Trump’s “style of doing business in the international arena, as well as at home.” “It will be foolish not to use this circumstance to implement any joint mutually beneficial projects – whether in the energy sector, in space, anywhere. And in those cases (they are the majority), when the interests of Russia and the United States do not coincide, the main thing is to prevent it from escalating into a clash, into confrontation…When some of our European counterparts turn diplomacy either into the ‘court’ of their ‘comrades’ from Washington to keep them ‘playing the war of Biden’ or replacing diplomacy with sanctions – this is a hopeless path. It has no success. But an honest dialogue on any issues – we see the readiness for this by the United States – we are also ready for it. At the same time, diplomatic comments can be very different.”
The Russian state media have followed Kremlin spokesman Dmitry Peskov in treating Trump’s claims as having been prompted by others. “President Trump’s statements were made after talking with Zelensky,” Peskov told Tass. “It seems, Zelensky’s opinions rubbed off on him. This view is in stark contrast with our understanding of the current state of affairs.” Peskov added: “”President Trump has never hidden his intention to ensure the economic interests of the United States. The simplest thing is to force the entire world to buy American oil at a higher price and American liquefied natural gas at a higher price.”
On one point, however, there is no doubt — there has been a shortage of automobile fuel – gasoline, petrol, essence, бензин – at Russia’s retail pumps, especially in the southwestern regions of the country. There is a correspondingly sharp rise in the trading price of the fuel, both auto petrol and diesel at the St. Petersburg International Mercantile Exchange (SPIMEX). The lead images chart the data which confirm the shortage and the price rise.
In wartime, the Russian state media cannot be expected to add fuel, or the shortage of fuel, to the US and Ukrainian fire. According to Alexander Novak, the former energy minister and now deputy prime minister in charge of the energy sector, the fuel shortage is normal for this time of the year when the balance between supply and demand is “difficult. There is a small shortage of petroleum products, which is covered by the reserves.”
The Carnegie Endowment’s Russia Eurasia Centre, a Washington propaganda source now based in Berlin, is more careful. “Right now, the situation looks challenging but manageable”, the think tank reported on August 26. “Most of the refineries that have been hit by Ukrainian drones continue to produce gasoline, albeit in reduced quantities. It has also been possible to redirect gasoline from unaffected regions, and some of the deficit has been eased by tapping state reserves. …There is still a long way to go before the transport, agriculture, and industrial sectors—or, most importantly, the army—experience any significant fuel shortages…It’s important to remember that a lot of Russian vehicles and military equipment run on diesel, not gasoline, and Russia has a diesel surplus. Accordingly, the sort of full-scale fuel crisis that could end up impairing the functioning of the economy—or the army—is still a long way off. On top of this, annual gasoline production in Russia exceeds domestic demand by up to 20 percent, while diesel production is more than double what is needed. Even if the damaged refineries (which account for about 20 percent of primary refining capacity) stopped functioning entirely, the resulting deficit would be small.”
The truth of the fuel position is acknowledged by Russian sources. But it’s more complicated than the propaganda suggests, explains Igor Yushkov, a leading expert on Russian energy policy at the Financial University under the Government of the Russian Federation (FNEB) and the National Energy Security Fund (NWF). This does not mean it is vulnerable to US and Ukrainian escalation, as Trump is implying.
“Russia has enough reserves of petroleum to compensate for the attacks on refineries,” Yushkov said in interview last Friday. “The problem is the logistics. Yes, Ukraine is still actively hitting our fuel bases. They began to actively hit refineries in August, when the Russian-American negotiations began – in order to disrupt them literally, they intensified their strikes. And they’ve been hitting the storages all these years. And in this regard, the border regions have all suffered quite a lot. Previously, you just had to take the train from the refinery to the storage facility by rail, unload the fuel cargo there, and from there you take it by lorry to the gas stations. Now the logistics have lengthened. We need more tanker trucks. The supply line is getting longer. For example, in the current conditions of Crimea, it is rather 2-3 weeks at best, because there is also a delay in delivery. Relatively speaking, if they only bought it now, then the fuel will be shipped from the refinery after a certain period, then they will need to deliver it directly to gas stations in the Crimea. That is taking several weeks.”
“The current situation with the production of petroleum products is ambiguous. Although the total production in the country remains at an acceptable level — 50% of diesel is exported, 50% to the domestic market — there is tension in the gasoline market. An increase in crude oil exports and a reduction in refining at some refineries may have led to a decrease in fuel production in August compared to last year. The ban on gasoline exports introduced in August has two consequences. On the one hand, it helps to lower prices on the stock exchange by creating surpluses on the domestic market. On the other hand, it can stimulate the growth of retail prices, as companies seek to compensate for lost export profits. The long-term maintenance of the ban is problematic, since excess fuel will require either a reduction in processing or the resumption of exports.”
“About the shortage of petroleum on gas stations — first of all, the shortage of petroleum is caused by rising prices on the oil products exchange due to a reduction of almost 50% in payments to oil companies from the state budget. Payments on the so-called damper — a reverse oil excise tax – have been reduced. The damper is a mechanism that compensates oil companies and a portion is paid back from the budget. It compensates for the difference between how much an oil product costs on the foreign market and how much the government wants to see it on the domestic market. That is, once a year, the state sets a certain price for gasoline and diesel, and, accordingly, if the price in foreign markets is higher, then the state pays oil companies. Prices for 95 and 92 gasoline are breaking records on the stock exchange, but oil refineries cannot raise the cost of fuel at gas stations after that – the Federal Antimonopoly Service monitors compliance of price increases. Therefore, the gas stations, in order not to operate at a loss, stop selling gasoline and wait for prices on the stock exchange to stabilize. And fuel problems are mostly arising at the independent gas stations which buy their gasoline only on the stock exchange. The big oil production companies don’t have such problems.”
(more…)
