Friday, August 31, 2018

Washington's Ever-Evolving Viewpoint on Russia

With the mainstream media positively apoplectic over Vladimir Putin and Russia in general since the Putin - Trump meeting in Helsinki, I wanted to take a look at what the other side of the political spectrum had to say about Mr. Putin before she ran for the Oval Office as well as a look back in time to see what another Republican president had to say about Russia's president.  I have posted on this subject in the past, however, given the current force-feeding of the anti-Russia narrative, it begs to be reposted. 

Fortunately for all of us, the very data breach that is the subject of the current Russian election meddling narrative provides us with a look at Hillary Clinton's approach to Russia and Vladimir Putin.  This information is sourced from a document that was released from captivity by unknown players from John Podesta's computer, and outlines some excerpts from Hillary Clinton's speeches that she was quite reluctant to share with the voting public, largely because she was playing to the extremely wealthy American demographic in those speeches (keep in mind that the content of these speeches was never denied by the Clinton camp or by Ms. Clinton herself):

1.) Remarks at the Institute of Scrap Recycling Industries Convention on April 10, 2014 regarding the selling of Boeing 737s to Russia:

In 2010, President Obama set a target of doubling America's exports over five years, and at the State Department I made export promotions a personal mission. So as I traveled the world on behalf of our country, I did everything I could to go to bat for American companies trying to break into new markets and compete on a level playing field. It took me to some really interesting places, particularly now with all the problems we're seeing with Russia and President Putin. Back in 2009, when Dmitri Medvedev was actually president, I visited the Boeing Design Center in Moscow, because Boeing had been trying to secure a contract for new planes with the Russians. And I made the case that Boeing's jet set the global gold standard. And after I left, our embassy kept at it, and in 2010 Russians agreed to buy 50 737s for almost $4 billion, which translates into thousands of American jobs.

2.) Remarks at Mediacorp on November 13, 2013 regarding Edward Snowden:

"Now, what did we learn from that? Well, we learned, as we learned again with Snowden, that we have so much information on the internet, even if you encrypt it, even if you think it's the most secure site in the world that the Chinese will not be able to get into it, even the Russians who are constantly knocking on the door can't get into it, somebody in your own operation can get into it. And in order to guard against that, you would have to have so many more layers of bureaucracy and encryption that was available through jumping through hoops and the like that you don't really know how to protect against the very people that you have vetted, supposedly, and employed.”

This comment from Ms. Clinton simply reeks with irony given the events that led to the release of her own personal emails and those of her campaign manager, John Podesta.

3.) Remarks at the Jewish United Fund of Metropolitan Chicago Vanguard Luncheon on October 28, 2013 regarding Mr. Putin's human side:

One time, I was visiting with him in his dacha outside of Moscow, and he was going on and on, you know, just listing all of the problems that he thinks are caused by the United States. And I said, ‘Well, you know, Mr.’—at that time, he was still prime minister. I said, ‘You know, Mr. Prime Minister, we actually have some things in common. We both want to protect wildlife, and I know how committed you are to protecting the tiger.’ I mean, all of a sudden, he sat up straight and his eyes got big and he goes, ‘You care about the tiger? I said, ‘I care about the tiger, I care about the elephant, I care about the rhinoceros, I care about the whale. I mean, yeah, I think we have a duty. You know, it’s an obligation that we as human beings have to protect God’s creation.’ He goes, ‘Come with me.’ So we go down the stairs, we go down this long hall, we go into this private inner sanctum. All of his, you know, very beefy security guys are there, they all jump up at attention, you know, they punch a code, he goes through a heavily-armed door. And then we’re in an inner, inner sanctum with, you know, just this long, wooden table, and then further back, there’s a desk and the biggest map of Russia I ever saw. And he starts talking to me about, you know, the habitat of the tigers and the habitat of the seals and the whales. And it was quite something.” 

4.) Remarks at Goldman Sachs on June 4, 2013 regarding a positive relationship with Russia:

And finally on Afghanistan and Russia. Look, I would love it if we could continue to build a more positive relationship with Russia. I worked very hard on that when I was Secretary, and we made some progress with Medvedev, who was president in name but was obviously beholden to Putin, but Putin kind of let him go and we helped them get into the WTO for several years, and they were helpful to us in shipping equipment, even lethal equipment, in and out of out of Afghanistan.

So we were making progress, and I think Putin has a different view. Certainly he’s asserted himself in a way now that is going to take some management on our side, but obviously we would very much like to have a positive relationship with Russia and we would like to see Putin be less defensive toward a relationship with the United States so that we could work together on some issues.

5.) Remarks at Sanford Bernstein, an integrated wealth management firm, on May 29, 2013 regarding Mr. Putin's personality:

I last saw [Putin] in Vladivostok where I represented President Obama in September for the Asia Pacific economic community. I sat next to him. He's an engaging and, you know, very interesting conversationalist. We talked about a lot of issues that were not the hot-button issues between us, you know, his view on missile defense, which we think is misplaced because, you know, we don't believe that there will be a threat from Russia, but we think that both Russia and the United States are going to face threats from their perimeter, either from rogue states like Iran or from terrorist groups, that's not the way he sees it.

I found Ms. Clinton's comments about having a "positive relationship" with Russia quite illuminating and her assertion that the United States would like to see Mr. Putin be less defensive towards his relationship with the United States could not be more ironic.

Now, let's switch gears and look at comments from a former United States president about Vladimir Putin.  Here are key parts of the transcript of a news conference held on Jun 16, 2001 following a meeting between U.S. President George W. Bush and Russian President Vladimir Putin held in Slovenia starting with this comment from the U.S. President:

"This was a very good meeting, and I look forward to my next meeting with President Putin in July. I very much enjoyed our time together. He's an honest, straightforward man who loves his country. He loves his family. We share a lot of values. I view him as a remarkable leader. I believe his leadership will serve Russia well. Russia and America have the opportunity to accomplish much together. We should seize it, and today we have begun."

When Putin rhetorically asked whether Russia could be trusted, he said that he would not answer that question and that he could ask the very same question of the United States.  Here is Bush's response to the question of trust:

"I will answer the question. I looked the man in the eye. I found him to be very straightforward and trustworthy.

We had a very good dialogue. I was able to get a sense of his soul, a man deeply committed to his country and the best interests of his country. And I appreciated so very much the frank dialogue. There was no kind of diplomatic chit chat, trying to throw each other off balance.

There was a straightforward dialogue, and that's the beginning of a very constructive relationship. I wouldn't have invited him to my ranch if I didn't trust him."

In typical fashion, the former President has now retracted his positive comments on Mr. Putin's soul as shown in this quote from an interview with Fox Business Anchor Maria Bartiromo in April 2018 (12 minute mark):

"

Here's the transcript of George W. Bush's comments on Mr. Putin:

"When I looked into his eyes and saw his soul, Russia was broke. I mean, short-term broke. And ah, the price of oil goes up and Putin changed.  Look, he's a very smart tactician. The problem is, his whole attitude on most issues is 'I'm going to win and U.S. is going to lose so I'm not very surprised.  He is a very aggressive person who wants to reinstate Soviet influence even though the Soviet no longer exists and therefore, I always felt it was always very important for the United States to be very forceful in dealing with Putin. Not belligerent, but forceful and, ah, you know, he's good."

So are we to believe that as long as Russia's economy nearly bankrupt, the nation's leader was acceptable but when Russia made economic gains, many of which benefitted U.S.-based companies, Mr. Putin became evil?  By that same logic, the United States must be a terribly evil nation.  While the "broke" logic behind George W. Bush's change of heart toward Mr. Putin strikes me as rather weak, his change of heart is not a whole lot dissimilar to Donald Trump's recent backpedaling over his remarks made after the Helsinki meeting.

In both of these cases, Russia was used as a pawn in America's geopolitical maneuvering.  As long as things between Russia and the United States worked in America's favour, all was "beer and skittles".  When Washington sensed that it was on the losing end of any backroom deals with Russia, those who we elected to lead us drag out the tired old anti-Russia narrative to convince us that the former communist nation is nothing short of evil and that it is doing what it can to both take over the world and destroy the American way of life.  At the very least, Washington is doing whatever it can to manipulate what they see as a gullible American voting public into swallowing the latest flavour of geopolitical Kool-Aid.  In any case, what we can learn from the most recent behaviour by Donald Trump is that his appraisal of Vladimir Putin is hardly unique among the most high-ranking of U.S. politicians.

Thursday, August 30, 2018

The Evolving Russia - United States Trade Dispute

Apparently, the United States is of two minds when it comes to international trade and the impact of trade agreements including NAFTA and the World Trade Organization as shown on this graphic from the Pew Research Centre:


As well, there is substantial disagreement on the recent increases in tariffs on imported steel and aluminum:


In addition, here's what Donald Trump had to say about the WTO:


All that said, even with America's skepticism about the World Trade Organization, a recent development shows that Washington is not loathe to use the WTO when it comes to a recent request.

Let's take a brief look at the trade in goods between Russia and the United States.  According to the MIT Observatory of Economic Complexity, Russia is the 16th largest economy in the world and the United States is one of the top export destinations for its products as shown here:



...and one of its top import sources:



In 2017, Russia placed number 23 in the United States pantheon of trading nations when ranked by imports as shown here:


Let's look at the trade data for Russia and the United States from the Census Bureau.  Here is a graphic showing the level of American exports to Russia going back to 2000:



...the imports going back to 2000:



...and the trade balance going back to 2000:  



With that data in mind, let's look at a recent trade development between the two nations as shown here:


In early July 2018, Russia introduced measures that would impose additional import duties on certain industrial goods from the United States in retaliation for the American imposition of tariffs on steel and aluminum imports from Russia, a move that was originally intended to punish China.  The additional duties of 25 to 40 percent will apply to imports of equipment for road construction, oil and gas, metal processing and mining as well as imports of fibre optics.  These tariffs are intended to compensate Russia for the estimated $87.6 million worth of damage suffered by Russian companies as a result of the U.S. tariffs on steel and aluminum which will cost Russia's metals exporters $537.6 million according to Russia's Minster of Economic Development, Maxim Oreshkin.

Apparently, Washington takes umbrage over Russia's tariffs for two reasons:

1.)  at the idea that Russia would apply tariffs to certain goods imported from the United States and not from other nations and 

2.) because these duties were higher than the maximum allowed under Russia's terms of membership in the WTO.  

Russia now has 60 days to settle the dispute; if it chooses not to, the matter will go to adjudication.  At this point, the Russians are arguing that within the framework of the WTO, nations are allowed to compensate for damages incurred as a result of "special protective measures" adopted by the United States.

When it comes to international trade, I guess you can have it both ways when you live in Washington.  You can both use and abuse the World Trade Organization at your own convenience.

Wednesday, August 29, 2018

Can Europe Rely on the United States for its Security?

While it received almost no coverage in the West, a recent article on TASS shows how the views of the United States and Europe over the "Russia File" are diverging.

Here is what was reported by TASS on August 27, 2018:


Note this quote which is particularly interesting given Washington's recent complaints about the unfair funding of NATO:

"Europe can no longer rely on the US to provide its security. It is up to us today to take our responsibilities and guarantee our own security, and thus have European sovereignty. We have to draw all necessary conclusions from the end of the Cold War." (my bold)

As shown here, Macron's sentiment about European security was also posted on his Twitter account:


So, what is President Macron's solution to European security?  Here's a quote:

"We must take all the consequences of the end of the cold war. Today, alliances still have all their relevance, but the balances, sometimes, the automatisms on which they were built are to be revisited. And that also implies for Europe to draw all the consequences. This reinforced solidarity will involve revisiting the European defense and security architecture. On the one hand, by initiating a renewed dialogue on cyber security, chemical weapons, conventional weapons, territorial conflicts, space security or the protection of polar areas, especially with Russia.

I hope that we launch a comprehensive reflection on these topics with all of our European partners in the broad sense, and therefore with Russia. Substantial progress towards resolving the Ukrainian crisis, as well as respect for the OSCE framework - I am thinking in particular of the situation of observers in Donbass - will of course be prerequisites for real progress with Moscow. But that should not stop us from working right now between Europeans. I'm counting on you for that." (my bolds)

Here's one of his tweets on the solution:


...and here is another:


If you are interested, you can use Google Translate to read President Macron's entire speech to the Annual Conference of Ambassadors which was given on August 27, 2018 which you can find here.

Just so you are aware, France is considered to have one of the world's most powerful armed forces as shown on this ranking from Global Firepower:


As you can also see, the United Kingdom and Germany are both considered significant when it comes to military power.

Finally, let's look at a one last quote from Macron's speech about Europe's place as a global powerhouse:

"Finally, we will be and we are today collectively tested because this Europe, I have said many times and I have just talked about its perimeter, its extent, has to face all the contemporary challenges of which I am speak since just now. And we have only one credible European answer: that of our strategic autonomy. The question is not whether we can convince the United States of America, it is a great people and a great country, the question is whether the United States of America looks to us as a power with strategic autonomy, this is the real question that is posed for Europe today. And it is clear that today it is not the case, we must look at ourselves with lucidity, even if it is cruel, I do not believe very sincerely today that China or the United States United States of America think that Europe is a power with a strategic autonomy comparable to theirs. I do not believe that." (my bold)

At the very least, it is interesting to see that, unlike many decision makers in Washington, France is looking to co-operate and strengthen ties with Russia as part of its move to becoming part of an autonomous European powerhouse that is not at the mercy of the United States.  Given that Europe is located at ground zero of any possible conflict with Russia, it is no wonder that France's president is concerned about relying on the United States for its security.

Tuesday, August 28, 2018

Syria and Iran - How to Thumb Your Nose at Washington

Last week's press conference in Jerusalem starring John Bolton, the man who never saw a war that he didn't love, provided the world with a glimpse of his strategy toward Syria and Iran, two nations that stand in the way of his version of American hegemony.  

Let's start by looking at the press conference which was held on August 22, 2018 at the U.S. Embassy in Jerusalem.  If you want to get his thoughts on Iran and Syria, please start at the 9 minute mark and follow through his stream of consciousness about both nations:


Obviously, one of Washington's greatest concerns in Syria is the presence of Iran.  While the United States continues to operate in Syria as an uninvited guest, now that the pro-Assad Syrians have managed to free much of their nation from the scourge of a seven plus year-long civil war, it looks like America's worst nightmare for its Middle East plans are coming to fruition.

This, on top of the recent warning to the Assad regime about the use of chemical weapons as shown here:


...would tend to show that Washington (not to forget about Israel) is getting rather anxious about what lies ahead for one of its most reviled government leaders, Bashar al-Assad, an avowed ally of Vladimir Putin's.  As such, Russia has warned that there is a significant possibility that terrorists with the assistance of UK Special Services will launch a chemical attack which will serve as a pretext for missile strikes by the United States and its allies in the region as shown in this news article from TASS:


Nikolai Patrushev, the Secretary of the Security Council of the Russian Federation, has also received a warning from Bolton that the United States will hit Assad if he is deemed to use chemical weapons at an August 23 meeting held in Geneva

Now, let's look at how Iran and Syria are handling the growing threats from the United States.  According to Tansim News, Iran's private news network, Iran and Syria have recently signed a military co-operation deal as shown here:


Here's what was reported about the relationship between Iran and Syria by the Syrian Arab News Agency (SANA):


....and here is Syria's coverage of the threats by the United States against Syria and Russia:


Lastly, here's what was reported by the Syria Times regarding a meeting between Bashar al-Assad and Iran's Defense Minister Amir Hatami and their moves toward "...strengthening the counterterrorism axis as to confront the US subversive policies...":


Notice that Iran's Hatami has pledged his support for maintaining Syria's sovereignty and independence from foreign intervention, exactly what Washington does not want to hear.

As you can see, Syria has every intention of continuing its relationship with Iran no matter what Washington and Israel may desire, thumbing their respective noses at the United States.  The fact that Iran was invited to the Syrian civil war "party" and the United States was not seems to have been totally forgotten by Washington in its haste for regime change in the Syrian Arab Republic.  I guess that America's global hegemony just isn't what it used to be.

Monday, August 27, 2018

Americans on Russia - The Will of the People

The mainstream media in the West would have us believe that there is absolutely no reason to encourage a diplomatic approach to Russia and that Washington's sabre-rattling over Russia's alleged meddling in both Ukraine and the 2016 presidential election is universally backed by Main Street America.  In fact, this could not be further from the truth as you will see in this posting.

A recent poll by Gallup which was conducted between August 1 and August 12, 2018 randomly sampled 1024 adults over the age of 18 living in all 50 states.  Pollsters asked the following Russia-related questions and received the following responses:

1.) How closely have you been following the news about Russia and the 2016 U.S. presidential election – very closely, somewhat closely, not too closely, or not at all?

Very closely - 33 percent
Somewhat closely - 34 percent
Not too closely - 18 percent
Not at all - 14 percent

The 67 percent of Americans that are closely following the news about Russia and the 2016 U.S. election is only slightly higher than the average 60 percent level of attention paid to more than 200 news stories since 1991 that Gallup has asked about

2.) Which comes closer to your view about Russian involvement in the 2016 U.S. presidential election –

a.) Russians did not interfere in the 2016 election, Russians interfered in the 2016 election, but their actions did not change the outcome of the election

b.) Russians interfered in the 2016 election and their actions changed the outcome of the election?

Did not interfere - 16 percent
Interfered but did not change the outcome - 36 percent
Interfered and changed the outcome - 39 percent
No opinion - 9 percent

When broken down by political affiliation, the findings of the poll are not terribly surprising as you can see here: 


Obviously, those Americans who preferred Hillary Clinton as president overwhelmingly believe that Russian interference in the 2016 election led to Ms. Clinton's defeat.  On the other hand, more than half of Republicans do believe that Russia interfered with the election, however, their interference had no material impact on the final result. 

3.) In your view, is it more important that the United States take strong diplomatic and economic steps against Russia, or is it more important that the U.S. continue efforts to improve relations with Russia?

Take strong diplomatic and economic steps against Russia - 36 percent
Continue to improve relations with Russia - 58 percent
Both equally - 4 percent
No opinion - 3 percent

If we look at another poll by Gallup from mid-August 2018, we find that only 35 percent of Americans approve of Donald Trump's handling of relations with Russia compared to 61 percent who disapprove, down from 37 percent approval in February 2018.  This compares to Trump's 38 percent approval rating for handling foreign affairs, an approval rating that is not substantially worse than Ronald Reagan at 44 percent and Barack Obama and 45 percent.  When broken down by party affiliation, 74 percent of Republicans approve of Donald Trump's handling of Russia compared to only 7 percent of Democrats and 28 percent of Independents. 

As we can see from the data in this posting, Americans do not overwhelmingly approve of taking a hard-line against Vladimir Putin and Russia.  Less than 40 percent of Americans believe that Russia's interference in the 2016 election made a difference to the final outcome and nearly six in ten Americans believe that it is important that Washington continue to improve relations with Moscow.  The results of this poll strongly suggests that the "anti-Russia at any and all costs" narrative promoted by America's mainstream media does not reflect the "will of the people", a result that is not terribly surprising given the growing political polarization in this post-truth era.

Thursday, August 23, 2018

United States Military Spending - Coffee Cups and Flight Helmets

With Donald Trump's concerns over NATO member states not paying their share of their own defense, let's look at what exactly U.S. taxpayers are getting for their "Department of Defense Tax Dollar" given that the United States spends more on its military than many of its allies and enemies combined as shown here:


Let's start by looking at coffee cups.  According to a recent feature on the Air Mobility Command website, we find this news item:


Here is a higher definition picture of the military hardware in question:


The news item opens with this line:

"Spending $1200 on a cup, even one that can heat liquids during flight, may sound a little expensive."

It would seem so, wouldn't it?

Apparently, the Air Force is seeking to develop a replacement for a plastic handle on the cup in the picture since it is extremely prone to breakage when dropped.  In 2016, the 60th Aerial Port Squadron at Travis Air Force Base in California purchased 10 of the pictured hot cups for $9630.  The price for each cup jumped from $693 in 2016 to $1220 in 2018 (see, we told you that there was inflation) requiring the Air Force to spend $32,000 for 25 new cups. Over the past three years, the 60th APS has spent nearly $56,000 to replace broken cups.  Part of the problem is that replacement handles for the cups are not available meaning that an entirely new cup has to be purchased when the handle breaks.  Apparently, the Air Force is looking to Phoenix Spark, an innovation program located at Travis, to replace the cup using a 3D printing option.   Here's a quote from the news item which quotes Nicholas Wright, a volunteer 3D designer and printer with the Phoenix Spark office:

The process took us about a week to develop a solution for the hot cup handle from learning the software to figuring how to physically print it,” said Wright. “We talked to air crew members about how they’d like it designed. They recommended a more ergonomic design. The reason for this is because the original handle is placed upside down so aircrews wanted a mix between comfort and strength. We achieved that in about seven days.”

The solution Wright and his team came up with features a curved handle.

“The handle currently on the hot cup has a square bottom which creates a weak point on the handle so any time it is dropped, the handle splits shortly after impact,” he said. “Our new rounded handle reduces that weak point. The handle we designed is stronger and capable of being printed at most Air Force bases.”

One of the reasons the curved handle is stronger, Wright said, is because of the layered printing that’s possible with 3D printing.

“Think of a tree that has multiple layers so it’s extremely strong in multiple directions,” he said. “The new handle has stacked layers with a solid piece around it so it’s similar to the layers of a tree.”

With the new design, the handle is also much cheaper to replace. Over the past three years, the 60th APS has spent nearly $56,000 to replace broken hot cups.

With the new design, the unit could save thousands, said Wright.

“Imagine you have to replace 40 hot cups each year at ever-increasing prices,” he said. “It’s much cheaper for us to replace the handle on 40 cups at about 50 cents per handle rather than purchasing 40 cups for more than $1,200 per cup.

I think that's enough about coffee cups.

Now, let's look at flight helmets.  The leading edge F-35 will require pilots to use a newly designed flight helmet that is integrated with the aircraft's internal systems.  The helmet, the F-35 Gen III Helmet Mounted Display System or HMDS, is built by Rockwell Collins (a pending acquisition target by United Technologies, one of America's largest defense companies) and provides the pilot with "revolutionary situational awareness".  The helmet is equipped to use six cameras that are embedded in the skin of the plane, affording the pilot a 360-degree view of the airspace surrounding the plane, similar to Nissan's Around View Monitor system.  The helmet visor also provides pilots with a heads up display and visor projected night vision.

Here are two screen captures of the brochure which covers the benefits and abilities of the world's most advanced biocular helmet-mounted display system and gives you a sense of what you are paying for:



Here is a video showing the helmet display system:


Now, what's the cost of this leading edge technology to U.S. taxpayers?   According to the Air Force Times, the newly designed flight helmet for the F-35 Lightning 2 costs an estimated $400,000 each (some estimates suggest that the cost is closer to $600,000), four times what its predecessor cost.  Each helmet must be custom-fitted to the head of each pilot to ensure a snug and comfortable fit.  According to the Air Force Times, the Pentagon is expected to purchase roughly 2400 F-35s meaning that a total of $960 million will be spent on the F-35 Gen III helmets, not including pilots that retire and are replaced with new pilots that will require new custom-fitted helmets.

Just in case you were curious, here is the latest summary compensation table for Rockwell Collins Named Executive Officers:


Well, at least someone is benefitting from high-cost helmets (and other products that Rockwell Collins built for the United States Department of Defense).

And that, folks, may just give us a sense of why Washington spends so much on "defense" when compared to its peers.  Spending more does not always mean that one is spending better, pretty much a rule of thumb when it comes to government spending. 

Wednesday, August 22, 2018

Another Unintended Consequence of America's Anti-Russia Sanctions - Oil Imports

With Russiagate and its accompanying sanctions consuming the media's attention, there is one aspect of Russian-American trade relations that gets almost no attention from America's mainstream media.  In this posting, I will outline the background to America's connection to the Russian oil business and the potential repercussions that face American oil refiners.  I apologize in advance for the length of this posting but I want to supply my readers with all of the background necessary to make an educated appraisal of Washington's current and future approach to sanctions against Russia.

According to the U.S. Energy Information Administration (EIA), the United States imports the following monthly volume of crude oil and petroleum products from Russia:


In May 2018, the latest month for which data is available, the United States imported 15.201 million barrels of crude oil and petroleum products from Russia, the highest monthly volume since October 2016 but well below the record volume of 25.083 million barrels back in May 2009.  The daily imported volume in May 2018 works out to 490,035 barrels per day, a relatively small part of the 10.22 million barrels of oil per day imported in May 2018, most of which was sourced from OPEC nations as shown on this table:


For completeness sake, here is a graph showing the totally monthly American imports of crude oil and associated products going back to 1981:


Despite America's increasing reliance on its domestic reserves of non-conventional oil, it is interesting to note that the U.S. economy still relies on over 300 million barrels of oil per month to "grease the wheels of the free market".

Let's look at a bit of background regarding Russia's oil reserves.  According to the EIA, in 2016, Russia was the world's largest producer of crude oil and the third largest producer of petroleum and other liquids after Saudi Arabia and the United States with average daily production of 11.2 million BOPD.  

Here is a graphic showing Russia's daily production and consumption of petroleum and other liquids going. back to 2007:


Despite U.S. sanctions on Russia's oil industry which include limiting Russian oil companies access to American capital markets and restrictions on sharing technology that would support Russia's deep water, Arctic offshore and shale projects anywhere in the world, Russia has still been able to maintain its production levels and may indeed help Russia in the future should oil prices rise to levels last seen before 2014.

Despite sanctions, Russia was able to export more than 5 million BOPD in 2016 with the following countries/regions as destinations:


Most of Russia's oil reserves and production being located in Western Siberia (located in eastern Russia) and, as a result, there is a significant investment in oil infrastructure transporting oil to the Pacific Ocean as shown on this map:


In 2016, the Kozmino port exported 594,000 BOPD, the De Kastri port exported 230,000 BOPD and the Prigorodnoye port exported 180,000 BOPD.

With that information in mind, let's look at the potential impact on the United States.  For those of us who have a background in the oil industry, we know that different oils have different physical characteristics.  Here's what the EIA has to say about differences in crude oil properties:

"The physical characteristics of crude oil determine how refineries process it. In simple terms, crude oils are classified by density and sulphur content. Less dense (lighter) crude oils generally have a higher share of light hydrocarbons. Refineries can produce high-value products such as gasoline, diesel fuel, and jet fuel from light crude oil with simple distillation. When refineries use simple distillation on denser (heavier) crude oils, it produces low value products. Heavy crude oils require additional, more expensive processing to produce high-value products. Some crude oils also have a high sulphur content, which is an undesirable characteristic in both processing and product quality."

Here is a graphic showing how widely variable the density and sulphur content of selected crude oils are from different regions of the world:


Each refinery is designed to use crude oils with different properties or a range of properties.  The EIA tracks the quality of crude oil imports that are processed in all refineries in the United States and API gravity varies from 11 degrees API (heavy oil) to 47.9 degrees API and sulphur content varies from 0 percent to 6.5 percent.

Again, with that background, let's look at recent developments.  According to Resource Works, the Nordtulip oil tanker departed from the port of Vladivostok in eastern Russia on June 22, 2018 and arrived at Anacortes terminal located in the state of Washington on July 31, 2018, carrying an estimated 600,000 to 650,000 barrels of oil.  Anacortes is the site of two refineries; one owned by Shell and the other by Andeavor.  Interestingly, despite the rise of America's presence at the global oil producer's "head table", the Pacific Northwest is a region relatively starved of oil given the decline in production from Alaska and the lack of pipelines to the lower 48 oil producing states.  Keeping in mind the information regarding refineries and the specific feedstocks that they require, one can see how these two refineries in "hydrocarbon isolated" regions of the United States could be at risk if oil supplies were reduced, a scenario that would cause pain for consumers in the region.

The key to this vulnerability is the imposition of yet another round of anti-Russia sanctions by Washington.  According to a 1991 law, given that the U.S. State Department has notified Congress that Russia used chemical and/or biological weapons during the March 2018 poisoning of four people in the United Kingdom, this determination triggers a set of mandatory sanctions which, in their second round, could include cutting the importation of "petroleum or any petroleum product".  It is this aspect of the anti-Russia sanctions that could have a significant and unanticipated negative consequences on American consumers in the Pacific Northwest and other regions where refineries rely on Russian crude oil.

In a rather unexpected turn of events, according to Reuters, the American oil industry is not particularly fond of the current anti-Russia sanctions.  The oil industry is lobbying against tighter sanctions with Exxon Mobil being among the most vociferous anti-sanctions lobbyists.  The American oil industry claims that U.S.-led sanctions unfairly penalize U.S. oil companies while allowing foreign energy companies like BP and Royal Dutch Shell to operate in the world's largest hydrocarbon "playground".

As we can see from this posting, as is typical in Washington, there are a wide range of unanticipated consequences from its diplomatic actions.  While Russia's oil imports are not a substantial part of America's overall energy needs at this point in time, the fact that much of America's current surge in oil production is from reservoirs with an extremely high production decline rate could mean that in the coming years, American consumers may be more reliant on Russian oil imports than anticipated.