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Comment by onepointsixC | Hacker News Reader

Sure, but before that gas was funding a self professed foe. It's much better to not fund your enemies.

That logic only works if Europe was the only trading partner available to Russia. What happened in practice is that Russia simply redirected trade to other countries while Europe now pays a huge markup buying from resellers.

But they aren't selling at their original price, Russia is now selling to those partners at a reduced price.

At the very least it reduces the amount of funds Russia has at its disposal for the war.

The discounts Russia offers to its partners are minimal, and as CNN reports, Russia's revenues are back to pre-war levels. So, not sure what you're going on about there. https://www.cnn.com/2023/04/14/energy/russia-oil-exports-iea...

That appears to show that the volume has returned but not its price.

"The revenue is still down 43% from a year ago, the IEA said, as Russia is forced to sell its barrels to a more limited pool of customers who can negotiate greater discounts."

That doesn't actually follow. Had the west not got into a sanctions war with Russia, then they might've never increased their output. The end result is that the profits have not been affected. More importantly, what actually counts is the relative damage. It's pretty clear that EU economy has been affected far more severely than Russian economy. IMF projects Russia to actually have growth this year, while there is a recession projected across EU states.

> IMF projects Russia to actually have growth this year, while there is a recession projected across EU states.

IMF bases their projection on data provided by Russian government agencies. So this works only if you trust Russian government to not fumble data.

I guess we'll see won't we. However, it's pretty obvious that Russia is doing massive amounts of trade with China and India. Trade between China and Russia has already reached over 200 billion this year. So, not really sure what this notion that Russian economy is collapsing is based on to be honest.

> However, it's pretty obvious that Russia is doing massive amounts of trade with China and India.

For sure India and China are eager to exploit the very unequal relationship where Russia now needs India and China much more than the opposite.

The Russian economy is not collapsing, but I'm pretty sure it's hurting. Even if we had real GDP figures, they'd be misleading as now a significant part of the GDP is coming from production of military gear which is literally being burned and does not generate income or feed into other parts of the economy.

This is just wild speculation that's completely baseless I'm afraid. We've literally been hearing this story for nearly two years now, and there is zero substantive evidence to support any of these assertions.

It's just basic economics. India and China have a bigger leverage, it would be stupid of them to not use it.

I mean, what's the alternative explanation of why India increased the Russian oil imports tenfold? It's not because of good will, it's because India can suddenly import Russian oil much cheaper than before. Why does Russia sell oil cheaper to India? Because it won't find another such big customer.

Basic economics say that Russia is a major commodity exporter and that as long as there is global demand for these commodities then Russia will have no problem selling them. It's like you don't understand how basic supply and demand works. India gets a great deal because it can buy oil from Russia at a slight discount and then resell it to Europe at a large markup. The loser here isn't Russia but Europe.

> India gets a great deal because it can buy oil from Russia at a slight discount and then resell it to Europe at a large markup. The loser here isn't Russia but Europe.

You're contradicting yourself. India is selling at a market rate, so if there's a profit to make, it's coming from the Russian side. Pick one - either India has a big markup or Russia sells with only small discount. Both can't be true.

You're the one who said that India can suddenly import Russian oil much cheaper than before. So, using your logic India is selling oil to Europe at a markup. If Russia is selling to India at a small discount, then India is still making money directly at the expense of Europe.

I'm happy to admit that India is making money as middlemen, that's exactly how the price cap was supposed to work. But given India is selling at market price, it's cutting into Russian profits. Indian profit is the same as Russian loss, so it's really silly to claim that Russian discount is "small" while India makes "big" markups.

That's absolutely not how the price cap was supposed to work since India is buying at a higher price than the cap and we've seen repeated complaints from western officials regarding this fact. Again, as many articles I've linked show, there is no sign that this is cutting into Russian profits in any significant way/ However, it absolutely is devastating European economy.

I'll reiterate my point since it clearly escaped you. The question is which economy is being hurt more relatively speaking. There is clear evidence that European economy is suffering and countries like Germany are now in recession. There is no such evidence regarding Russian economy.

> The question is which economy is being hurt more relatively speaking.

2022 GDP growth:

* Germany +1.9%

* Russia -2.1% (according to Russia's agency)

Yeah, evidence absolutely points to European economy getting hammered while Russia is better than ever.

now let's forward and see how things are going in 2023

https://www.cnn.com/2023/05/25/economy/germany-recession-q1-...

https://www.bloomberg.com/news/articles/2023-05-25/germany-e...

https://www.reuters.com/markets/europe/russian-economy-minis...

Evidence absolutely does point to European economy getting hammered while Russia is better than ever. I have to ask what your agenda is here given that you keep trying to pretend things that are obviously happening aren't happening?

>> while Russia is better than ever.

In same fairytale, that may be so. In the real world, oil and gas revenue is 40% of Russia's federal budget and down -52% YoY as of April, so that's more than -20% from oil and gas alone gone before taking collapse of other exports and explosion of military expenditure into account. At this rate, we'll see a replay of 1998 soon.

In the real world Russia is making pre-war level profits of its energy exports. It's like you don't understand the concept of supply and demand, the need for the energy and other commodities that Russia was exporting hasn't magically gone away, and you can't just make these things appear out of thin air. The fact that so many people are unable to wrap their heads around is idea is just amazing.

Nice move of goalposts from "better than ever" to "pre-war", that is, Covid-riddled era with low demand.

The hard facts are that federal revenue is down -22% while expenditure is up +26% and Russia is running a 30% deficit.

That's some nice cherry-picking. German "barely a recession" projected at -0.1% over 2023 with most of the Europe growing is "getting hammered". Russia with -2.3% is "better than ever".

I mean if you're just going to keep repeating that then there's no point continuing this conversation. The Reuters link I provided clearly shows that Russia is projecting growth this year.

It doesn’t matter. The margins for the Russians would have been higher without middlemen.

Now they are lower. (Partial) success!

That's not what the article says. In fact, in terms or revenue levels that's the opposite of what it says.

There's no other customer for the gas Russia used to sell to Europe. There are no pipelines from western gas fields to the east.

CNN article I linked in another disagrees with you.

The CNN article doesn't mention natural gas at all.

Russia's April gas exports to Europe up 7.5% from March, and as statistica link shows, Europe is nowhere close to cutting off Russian gas. The whole narrative that EU is independent from Russian fossil fuels is just fake news.

https://www.reuters.com/business/energy/russias-april-gas-ex...

https://www.statista.com/statistics/1306522/key-importers-of...

> The whole narrative that EU is independent from Russian fossil fuels is just fake news.

I agree with you on that one. It's a longer project to become independent of Russian energy completely and we're not there yet. But the level of dependence dropped sharply since last year.

Not nearly as sharply as people claim, what's happening in practice is that Europe is just buying repackaged Russian fossil fuels through resellers. I find it amazing that people can't understand that you can't just make huge volumes of oil and gas appear out of thin air. Europe would have to drastically change its whole energy infrastructure to become actually independent of Russian energy. This will be a decades long project of creating alternative energy production.

Not all. Russia doesn't have any other customers for gas which it used to sell to Europe because of the lack of pipelines leading elsewhere. Its LNG capacity is very limited. Keep also in mind that Russia's gas has never actually been sanctioned and Europe is willing to buy it in the short term.

> This will be a decades long project of creating alternative energy production.

It will take years, yes. Europe kind of ignored this problem, now it will have to pay to get out of it. There's no other way, though.

Russia is already building pipelines to China on a massive scale https://www.globalconstructionreview.com/russia-to-invest-al...

So, by the time Europe actually manages to wean itself off from Russian gas, there will be infrastructure for Russia to direct gas to China and other countries. I certainly agree that Europe has no other choice at this point. How Europe manages its energy transition is a big question though since energy is needed to build out the alternative infrastructure.

First, China has always paid significantly less than Europe for Russian gas.

Now, it looks like Russia is going to spend $100 billion on the pipeline to sell its gas cheaply. But wait, China isn't that eager to commit to the project: https://www.ft.com/content/541f8bcb-118a-419e-869f-3273fcc9c...

Maybe China is trying to bargain even better price? China can, after all, buy energy from other sellers, but Russia has nowhere else to sell its gas.

The simple fact here is that China will want to secure resources from Russia that will not be affected by western sanctions going forward. Russia will sell gas and oil to China at a discount, but at the end of the day Russia gets to offload its resources and China secures its energy.

Meanwhile, Europe is stuck buying LNG on the spot market at a far higher rate than it was getting via pipelines from Russia. I wonder who the bigger loser in all this is...

The whole context here is whether Russia is suffering economically as a result more than Europe. Given that Germany is already in a recession, it's pretty clear what the answer is.

> The simple fact here is that China will want to secure resources from Russia that will not be affected by western sanctions going forward.

Now, that's not a simple fact. A simple fact is that China still didn't commit to the project.

> but at the end of the day Russia gets to offload its resources

Don't you think that the price is an important part here? If Russia "offloads" its resources at prices near break even, then the whole situation is a strategic loss.

> The whole context here is whether Russia is suffering economically as a result more than Europe. Given that Germany is already in a recession, it's pretty clear what the answer is.

Even the poor data we have points to Russia being the bigger loser.

> Now, that's not a simple fact. A simple fact is that China still didn't commit to the project. Large scale projects take time to negotiate, the fact that you're desperate to make something more out of it says volumes.

> Don't you think that the price is an important part here? If Russia "offloads" its resources at prices near break even, then the whole situation is a strategic loss.

Except they're not selling at break even prices, this is just the fairy tale you keep repeating here.

> Even the poor data we have points to Russia being the bigger loser.

It doesn't show anything of the sort as numerous articles I've provided clearly state. However, you're clearly just going to repeat this like a broken record so I don't see any point continuing this discussion.

We'll see who's right soon enough.

Your logic only works if Russia could simply divert the flow of resources from Europe to somewhere else. They can't, not simply.

This has already happened.

No it did not. Neither by volume nor revenue.

https://www.cnn.com/2023/04/14/energy/russia-oil-exports-iea...

You weren't talking about crude oil only, were you? So what point are you trying to make with this article?

Russia isn't able to sell it to other customers for the same price as they are able to sell it to Europe. Transport, limited buyers all depress the price they can command. The Europeans aren't paying a huge markup - Oil is a commodity sold on an open market. Any oil that was originally from Russia had to been sold to an intermediary at a significant discount.

Long term investment is after Russia implodes the EU won't have to spend as much on weapons as they do now.

At the rate the things are going, it's looking far more likely that it's the EU that's going to implode.

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