Oil tax cuts help the Kremlin, punish Ukraine

Oil tax cuts help the Kremlin, punish Ukraine

Opinion















The oil market is desperately in need of demand destruction. Governments should either be encouraging behavioral changes such as using more public transportation or allowing expensive fuel to force consumers to change.

Instead, industrialised countries are doing the opposite. Call it demand “construction.” From Germany to New Zealand, and from England to California, policymakers are either cutting taxes on gasoline and diesel or offering blanket, untargeted energy subsidies. Both will probably boost oil demand at the worst possible time.

The policies are, of course, wildly popular. But they are not only economically wasteful, they will also do geopolitical damage. Fuel tax cuts are essentially a subsidy to Vladimir Putin, and they hurt the effort to end the war in Ukraine. Think about it: If oil becomes more affordable, consumption rises. The higher oil demand goes, the higher oil prices go, too, and the more money the Kremlin makes. Those extra petrodollars can go toward killing more Ukrainians.

According to the International Energy Agency (IEA), the global oil market is likely to be short by as much as 3 million barrels a day by summer if Russian crude production