Previous posts in this discussion:   » Russia-Ukraine War Military Update: Who Will Exhaust Whom First? (Cameron Sawyer, 08/01/22 6:30 AM)    » War Update: Russian Economy is Reeling (Mendo Henriques, 08/02/22 3:47 AM)     » Fun with the Fungible (David Duggan, 08/03/22 4:21 AM)

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Fun with the Fungible (David Duggan, USA, 08/03/22 4:21 am)

Mendo Henriques wrote on August 2nd: "Russia has compromised its position as a major exporter of goods; it lost key markets and it will have a hard time turning to Asia with non-fungible exports like gas and oil."

I thought gas and oil are the quintessence of fungible goods. Maybe Asia can buy elsewhere, but if Russia drops the price below OPEC, then why would Asia not buy?

JE comments:  I had understood Mendo's point to mean that Russia has few export options beyond resources such as gas and oil.  It does not have the option of simply exporting something else if its gas and oil cannot be sold.  

Export substitution?

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Comments/Replies

• How Russia's Gas Exports are "Non-Fungible" (Mendo Henriques, Portugal 08/05/22 5:14 AM)
  Thank you, David Duggan, for throwing a bit of fun into a messy issue.
  
  I used "non-fungible" as JE understood it and supported by the Sonnenfeld paper.  Exporting gas on a continental scale requires a complex network of fixed pipelines.
  
  
  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4167193
  
  
  
  JE comments:  Whenever WAIS discussions turn to pipelines, I always think of our late colleague Bob Gibbs, who made a hobby of studying their infinite complexities--economic, geopolitical, technical, even environmental.  As for gas, it indeed is non-fungible for the Russians to sell, but extremely fungible for the nations who can buy it on a worldwide market.
  
  
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