As the nations of the world consider imposing an oil embargo on Russia in response to its invasion of Ukraine, some companies have already enacted their own boycotts.
One such company is Shell. Shell not only announced its decision to suspend Russian oil purchases for the time being, it even went so far as to apologize for having made such a purchase after the Russian invasion of Ukraine began.
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“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry. As we have already said, we will commit profits from the limited, remaining amounts of Russian oil we will process to a dedicated fund. We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine,” said Shell Chief Executive Officer, Ben van Beurden, in a post on the company’s website.
ExxonMobil made a similar move earlier. “ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation,” the company said in a statement. “We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.”
And so it has begun the process of discontinuing operations and developing steps to exit the Russian Oil Sakhalin-1 venture. That is a project operated by a consortium that includes Russian, Japanese and Indian companies for drilling oil on the Russian island of that name.
The news comes as Americans are complaining about gasoline prices breaking an average of $4 a gallon nationwide. This, it should be noted, is still relatively low compared to the rest of the world. At less than $1 a liter, the average price in the U.S. is still only about half of the cost per liter in most of Europe and Israel.
The turmoil in Ukraine has already caused the price of oil to jump due to concerns over its continued supply. World stock markets have also gone down as investors are wary of putting there money into companies because of the current world political instability. So Russian oil is not the only issue here. But oil prices are a significant factor in the production and distribution of all products the world over and any increase in its price leads to inflation.
The price of oil already hit a 13 year high, breaking the $130 a barrel mark. And this is without any imposition of a Russian oil embargo. Russian officials have warned that an embargo could lead to prices of $300 a barrel, but this is not really a likely scenario.
If anything, the proliferation of electric vehicles and the increased use of renewable energies make Russian oil and natural gas less important to the world economies. And oil crisis would surely be temporary and immediately reversed once the current crisis comes to an end.
And should there be an actual crisis due to embargos of Russian oil and natural gas, it will probably lead to a speeding up of the global changeover to electric vehicles and alternative energies.