Chancellor's Leadership Professor |
Assistant Vice President |
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The Effects of the 2022 Sanctions on Russian Oil PricesWe document the effect of the oil embargo and price cap on Russian oil exports in the wake of the Russian invasion of Ukraine in February 2022. Based on a calibrated model of global oil supply and demand, we show that the embargo forced Russia to accept a $32/bbl discount on its Urals crude in March 2023 relative to January 2022, nearly half of which is directly attributable to the higher cost of shipping crude oil over longer distances, as Russia diverted much of its crude oil exports to India. The remainder ($17/bbl) can be explained by increased Indian bargaining power. We also provide a similar analysis for the ESPO price discount on exports to China. In contrast, the price cap deprived Russia of the financial resources it spent on assembling a "shadow" fleet of tankers, but its effect on the Russian oil export price was negligible once the adoption of the price cap had facilitated the use of Western services to transport Russian oil to Asia.
The Electric Ceiling: Limits & Costs of Full ElectrificationElectrification is a centerpiece of global decarbonization efforts. Yet there are reasons to be skeptical of the inevitability, or at least the optimal pace, of the transition. Consumer preferences can bolster or slow electrification goals; and electrification is likely to encounter physical and economic obstacles when it reaches some as-yet-unknown level. The credibility and eventual success of decarbonization efforts is enhanced by foreseeing and ideally avoiding predictable but non-obvious costs of promising abatement pathways.
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