The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Gas, Diesel, Kerosene:
Embargo and Speculation

Feb 20, 2023

This article is translated from the February 10 issue #2845 of Lutte Ouvrière (Workers Struggle), the newspaper of the revolutionary workers group of that name active in France.

On February 5 the G7 countries and Australia decided to block petroleum from Russia. This affects crude oil, diesel, gas, heavy oil for power plants, and kerosene. (The G7 includes the U.S., Germany, England, France, Italy, Canada, Japan, and the European Union.)

The announced purpose is to punish the Russian government for the war in Ukraine, by drying up the revenue it gets from exporting oil.

In fact, Europe—which was heavily dependent on importing Russian petroleum—took the time beforehand to find alternative suppliers. So did the U.S., which imports significant quantities of Russian oil, despite having its own oil fields.

The U.S. and Europe both negotiated contracts with countries that seized the opportunity of Western sanctions to transform themselves into oil exporters. For example, India. Before the war in Ukraine, Russian oil only made up one percent of India’s imports, but now it’s shot up by a factor of nearly 30, to 1.27 million barrels. Because Russian oil processed in India is considered an Indian product, the G7 countries can buy it at the market price.

Russia stands to lose a hundred million dollars a day because of the embargo. But Russia can still export its oil, which the West needs even more than before the war. Middleman countries like India benefit by getting their supply from Russia at a good price. They take their cut along the way when they resell the portion of processed Russian oil they don’t use. American and European oil companies also benefit. They still have enough to flood gas stations around the world, plus the sectors of the economy dependent on oil, like agriculture, transportation, home heating, and so on.

So, is the balance even? Not for consumers! They have already been warned not to expect prices to go down. This system creates a host of middlemen and must keep them and the speculators fat. They find ways to multiply their opportunities to make fortunes worldwide. Of course, oil majors like Total take their usual lion’s share of the deal. The war in Ukraine is the best fuel to pump up their soaring profits.