Energy Report: Russian Oil Rush

Oil prices are on a tear with gasoline prices going up every week since Joe Biden has been president. He has made it clear that he is ready to sacrifice American jobs and increase the cost of gasoline for his vision of a green planet. Yet so far, the trend is having the opposite effect. Because of the Biden administration, it is more unfriendly to invest in U.S. oil and gas, so the world’s biggest polluters will start to pick up oil production while the U.S. is left out. One of those polluters is Russia. Russia is already a direct beneficiary of Biden's green energy push. If one did not know better, one might be asking the question of whether Russia has an undue influence over American Energy Policy.

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Bloomberg reports that “U.S. President Joe Biden’s push to slash carbon emissions may inadvertently give a short-term boost to energy companies in one of the world’s biggest polluters. Investors are betting that Russian oil giants such as Lukoil PJSC, Rosneft PJSC, and Statnett PJSC will rally as they mop up market share from rivals in the U.S. and other countries seeking to switch to clean energy. An index of Russian energy stocks has returned 8% in dollar terms so far this year as crude prices rallied, compared with 2% for European oil and gas companies. “Governments will likely limit global companies’ capacities to drill and extract resources,” said Eduard Karin, who helps oversee $1 billion of assets at Alfa Capital Asset Management in Moscow. “The global majors are entering a new market, a new industry where there are a lot of unknowns, and the return on capital is unclear.”

Bloomberg says that Russia is the world’s fourth-biggest carbon emitter, but unlike other major polluters, the government does not have a plan to transition away from fossil fuels. Instead, its state-owned energy companies benefit from some of the world’s lowest production costs and tax breaks, making them well placed to gain in the short term.

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