S8 Ep568: 10. SEG 10: Michael Bernstam discusses how rising oil prices bolster Russia's budget. However, the Russian economy faces contraction and "military Keynesianism," while the United States remains a resilient net energy exporter despite global supply chain d
The John Batchelor Show
John Batchelor
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🗓️ 12 March 2026
⏱️ 6 minutes
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Summary
10. SEG 10: Michael Bernstam discusses how rising oil prices bolster Russia's budget. However, the Russian economy faces contraction and "military Keynesianism," while the United Statesremains a resilient net energy exporter despite global supply chain disruptions. (10)
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Transcript
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| 0:00.0 | I'm John Batchel with my good colleague Michael Bernstam, who has helped me understand the sanctions, |
| 0:21.9 | the sanctions on Russia for these last years of the Ukraine conflict. The fact that we're talking |
| 0:27.1 | about Ukraine conflict makes us unique now because everything is pushed aside for the |
| 0:32.2 | straight-of-hormuz and the shortages. However, the simple math I do is that the Russian budget is now helped by the |
| 0:41.1 | price of oil and the availability of natural gas. Is that correct, Michael? |
| 0:45.7 | It is correct. Russia exports 7.5 million barrels per day, and so the simple arithmetic is that |
| 0:53.2 | with this capacity to export, every $10 increase in |
| 0:57.3 | the price of oil increases about $27 billion for Russia, which is about 1.2, 1.3% of their GDP, |
| 1:08.7 | which means that if half of that is taxed, they cover 0.7.8% of their |
| 1:16.8 | GDP for their budget. |
| 1:22.1 | And so when they have the budget deficit, which is now about 3.5% of GDP, that's how it was in 2026. |
| 1:32.3 | They can cut half of that budget deficit just by increased oil and natural gas prices. |
| 1:39.3 | So it's a great boon for them, but it is short-lived. All right, they will benefit for a few months, but generally they cannot increase their |
| 1:49.0 | oil production, and no one can increase this oil production because there is no idle oil |
| 1:57.0 | in Russia. |
| 1:58.0 | All oil is exported to China, India and other Asian countries. The European exports are cut off, but Russia doesn't have any spare capacity. Natural gas, it does have spare capacity. But it is for pipeline gas, because they have very little capacity for liquefied natural gas and it has to be |
| 2:19.5 | transported through the Arctic and in the Arctic they need ice class carriers of tankers of |
| 2:27.0 | liquefied natural gas they don't have it so it's only the pipelines idle pipelines some of |
| 2:33.2 | them were damaged in the explosion. Some of them |
| 2:35.6 | are still intact. But the Europeans don't want to take their chances because in the past, |
| 2:41.4 | Russia used natural gas as a weapon to influence European security and political decision-making |
| 2:48.9 | and policies. And now the Europeans have storages and they just want to wait and they are not taking |
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