As of this writing, if early (Wednesday evening) reports are correct, at least 4 Ukrainian cities are reported to be under heavy enemy fire. By the time you read this things may be far worse.
Some great joker somewhere is seeing how far humans can be pushed and still retain their sanity. Covid has pounded many lives and psyches. Just when there appeared to be a light at the end of the tunnel, with restrictions lifting in various places, disillusion and years of frustration boiled over in Canada and around the world in the form of ‘freedom protests’. It doesn’t matter what side of that fence you were on, or whether you hopped back and forth as the situation unfolded – it was a terrible thing brought on by the pain of many of our fellow citizens.
Our government rushed through legislation that caught the world’s attention, and it seemed like a disastrous situation was made ten times worse. Again, it doesn’t matter which side you are on, no one could be happy to see our country and all the other joint participants in such a state. But then on Tuesday Trudeau announced bank accounts would be unfrozen, and on Wednesday he lifted the state of emergency. Another glimmer of hope. But that one only lasted a few hours, and it was pummeled out of existence by the worst situation imaginable. War. Every mother’s nightmare. Even worse, totally unnecessary war, a war that appears to be some sort of epoch-defining vanity project.
This is a crappy and short post to replace a more substantive one that examined the future for oil and natural gas given the state of global demand, the lack of investment, and the fact that the world has been in a bidding war for these products. It has been dawning on many global observers (and bidders) that we have danced precariously close to the edge of not being able to provide the fuel that the world requires to keep functioning. The planned post was a bit of an examination of some of those repercussions – the hardships that are endured in parts of the world that lose access to fuel when needed, and the odd situation that our hydrocarbon sector might soon find itself in – being recognized as absolutely critical to keeping the world’s machine going. There was some miscellaneous rambling in there about potential price spikes due to geopolitical uncertainty, with the expectation that Putin would play with his boundary pushing in order to achieve some small victory without having to do anything other than act aggressive.
All that analysis is now dumpster material, like standing there with kitchen renovation plans in hand while watching a tornado bear down on your house.
Commodity prices are going to soar, because the world’s shaky supply has now become shakier. Russia is a major exporter of oil, natural gas, wheat, and other critical industrial metals/minerals. The future of all that supply is now at stake, and the supply chain suffering we are all feeling is about to get a lot worse.
But no matter how bad that supply chain pain grows, the only relevant thought at the moment is that that pain pales in comparison to what Ukraine is enduring. They will suffer through hell for some unknown period, and that will spread elsewhere, and no one knows where or for how long or with what severity.
It feels like there should be a war effort to help that poor country, a country that has been caught in a geopolitical crossfire and now essentially stands alone. There will be sanctions of course, and there is much talk about the severity of them, yet at the same time Russia holds an enormously powerful hand in terms of energy and mineral supply, which means Putin is protected like a porcupine. Touch him too hard and the consequences will be severe, which is why even yesterday the Biden administration seemed unwilling to place sanctions on Russian oil and gas flows (Reuters: “The Biden administration is not expected to target Russia’s crude oil and refined fuel sector with sanctions due to concerns about inflation and the harm it could do to its European allies, global oil markets, and U.S. consumers…”).
But that strategy was communicated before Putin started dropping bombs. There will be reams of speculation but it seems unlikely anyone knows where this goes next.
In lieu of any kind of war effort, the best we can do is keep producing what the world is going to need more than ever, help keep the ship afloat, be there when the dust settles. Wishing all the best for those poor people.
Read more insightful analysis from Terry Etam here, or email Terry here. PS: Dear email correspondents, the email flow is wonderful and welcome, but am having trouble keeping up. Apologies if comments/questions go unanswered; they are not ignored.