The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 passed with large, bipartisan majorities, and was signed into law by President Donald Trump on September 18, 2026.
This week Trump broke the letter and spirit of the law with a deal for Russia to release 36 million barrels of diesel into the world market.
It sounds crazy. Is Trump is really doing this? He is.
Maybe there is something in it for the Trump family, some deal with Lukoil. Maybe it is wordless signaling, a way to show Ukraine that notwithstanding the Lindsey Graham Act, Trump supports Russia in its war with Ukraine, so Ukraine should give up. Maybe it is political theater to show American buyers of diesel that Trump will do anything to lower the cost of diesel, including financing our enemy.
It is still the oil era. My age cohort left college and graduate school in the early 1970s to experience as adults the disruptions of the first big oil shock. I remember struggling to buy enough gasoline to travel round trip from New Haven to Boston for a weekend. The gasoline stations were out of gas and closed on Sundays. As an aide to U.S. Rep. Jim Weaver (D-OR) in 1977, I staffed a booth at county fairs explaining the congressman's bold proposal that we barter with Middle East oil kingdoms a one-for-one deal: a bushel of wheat for a barrel of oil. The commodities had been at parity, each about three dollars, a price Americans considered fair. But in 1977 oil now cost us $12/barrel. Weaver was a Democrat with a good feel for a populist issue: demand parity. In the 1970s, the nationalist animosity against Middle East countries was not religious or cultural. The fact that they were Muslim was a non-issue. American voters were angry that they had economic leverage and were extorting us. What an outrage! I was young and learning politics.
College classmate Erich Almasy has his own history with oil, and he shares it in this guest post. He attended Harvard Business School, then joined a management consultancy. He was young and learning the oil industry.
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| Erich Almasy, with Gulf logowear added |
Guest Post by Erich Almasy
I spent several years consulting for GORAM (Gulf Oil Refining and Marketing), based in Houston, Texas. It was 1978, five years after the world had gone through the first energy dislocation. Following the Yom Kippur War and the United States’ support for Israel, the leading oil countries of OAPEC (Organization of Arab Petroleum Exporting Countries) embargoed oil to the United States, and prices quadrupled from $3 to $12 per barrel. OPEC had formed in 1960 as a cartel of oil-producing nations: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, but OAPEC was specific to Arabian producers. Most of these were allies of the United States, but they joined to cut production and embargo oil, resulting in long lines at American gas pumps. At that time, the United States imported roughly 30 percent of its oil, most of it from the Middle East.
Gulf Oil had been created in 1901 to market output from the Spindletop oilfield in Beaumont, Texas, and was headquartered in Pittsburg because the Mellon family controlled it. Throughout the 1930s, Gulf invested in oil fields in Kuwait, Bahrain, and Venezuela. By the 1940s, Gulf was recognized as one of the Seven Sisters, the world’s leading oil companies, which included British Petroleum, Royal Dutch Shell, three former Standard Oil companies, Texaco, and Gulf. The cost of oil from Gulf’s holdings was estimated at 20 to 50 cents per barrel. The company’s strategy was to “monetize” oil in whatever way possible by refining the liquid gold into anything that would sell: asphalt, heating oil, kerosene (jet fuel), diesel, and gasoline. Gulf Oil had gas stations in all 50 states until 1973.
My consulting role was to evaluate GORAM’s strategy since it was now harder just to make money by maximizing production. Value-added was now the key. To start, I received a primer on how oil is turned into derivative products, a process somewhat misleadingly called distillation. Crude oil pumped out of the ground derives from fossilized organic remains that were subjected to pressure over millions of years. There is no single chemical formula, but generally it is represented as a complex hydrocarbon of C85H15. Heat and/or a catalyst can break the carbon-hydrogen bonds into several component parts. At the refinery, crude oil is heated to temperatures ranging from 950°F to 1400°F. The heated oil can be partially broken up by a catalyst, usually a form of zeolite, a naturally occurring aluminum compound that breaks ionic chains. Catalysts don’t change what happens, but they reduce the heat needed and thus the cost of refining.
My consulting role was to evaluate GORAM’s strategy since it was now harder just to make money by maximizing production. Value-added was now the key. To start, I received a primer on how oil is turned into derivative products, a process somewhat misleadingly called distillation. Crude oil pumped out of the ground derives from fossilized organic remains that were subjected to pressure over millions of years. There is no single chemical formula, but generally it is represented as a complex hydrocarbon of C85H15. Heat and/or a catalyst can break the carbon-hydrogen bonds into several component parts. At the refinery, crude oil is heated to temperatures ranging from 950°F to 1400°F. The heated oil can be partially broken up by a catalyst, usually a form of zeolite, a naturally occurring aluminum compound that breaks ionic chains. Catalysts don’t change what happens, but they reduce the heat needed and thus the cost of refining.
My work with Gulf extended over six years and focused on finding alternative markets within the constraints of the crude type and production process. During the 1940s and 50s, Gulf Oil ranked in the middle of the world's oil companies. By 1973, it produced and refined roughly 3 million barrels of oil per day, about 5 percent of world output. In 1975, Kuwait nationalized its oil business, and Gulf Oil’s reserves dropped dramatically. By 1984, Gulf was an easy target, and lax antitrust oversight by the Reagan administration allowed Chevron (formerly Standard Oil of California) to purchase the company.
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"The fact that they [Middle Eastern oil nations] were Muslim was a non-issue". No "religious or cultural" issues connected to the embargo and associated animosity?
ReplyDeleteWhen oil prices quadrupled after Nasser and his pan-Muslim colleagues attacked Israel in 1973 on Yom Kippur, the holiest Jewish holiday? The conflict also known as the Ramadan War? When nations that supported Israel were targeted for economic warfare? When Jewish control of "Muslim" holy city Jerusalem was, has ever been, and remains the prime motivator of Islamist violence there and elsewhere since the formation of the Israeli state?
Perhaps I missed your meaning. Not the first time, I know! Perhaps it's a matter of historical perspective and personal priorities.
The thinking about Israel has evolved. In the mid 1970s Israel was seen as good, clean and heroic among people in my extended political circle. They were victims who then became scrappy defenders of themselves. The discussion of oil did not have a Samuel Huntington/civilizational/battle-of-destiny orientation. It had a "they went on strike against us" feel. It was economic and they wanted more and we lost our bargain oil, complicated by the fact that we built our economy and consumer culture about bargain oil. Muscle cars. Big V-8 engines. I bought gasoline for 21 cents a gallon once in Michigan, noteworthy because it was 28 cents a gallon in Massachusetts. I earned $2.20/hour at my work-study job in 1971, a payment only a little better than minimum wage. My discussion with voters at the fair did not have a strong "murderouos foreigner," or "they don't send their best. Rapists. Murderers. . ." feel. No, ""they eat our dogs, they eat our cats." The current mood is racial and religious and civilizational. Not then. We understood that Russians were the Cold War enemy, but we didn't discuss the Cold War as civilizational; it was ideological, mostly. It was not that the "Arabs" were jerking us around. It was that we were at an economic struggle, and theyu sprung this squeeze play on us. Americans today don't complain about American oligarchs as foreigners. We think of them as self-serving jerks. Your comments about Jewish holidays and Muslim cities seems to me foreign to the time. Did the word "Islamist violence" exist in U.S. discussions prior to the 1979 hostage event? Maybe, in highly Jewish circles in NYC or Boston or whereever, but not in SW Oregon.
DeleteI’d like to suggest “devolved” in place of “evolved”. Maybe to say that is, er, Islamophobic, a modern-day and inexplicable Democratic bugaboo.
DeleteTrump‘s Meta message: the law doesn’t apply to me.
ReplyDeleteWhat if Israel had oil reserves? Would their oil policies revolve around, and be influenced by, the Torah? Would oil money from their deposits be put into a sovereign wealth fund for the nation? Is religion a factor in oil sales? If so, to what degree? If oil fuels the war efforts of their attacker, would they continue to supply them? Exactly where does religion factor into oil money?
ReplyDeleteIt doesn't matter if the law applies to Trump. The law means nothing to him because he's immune to prosecution. So, he does what he wants. Laws are for losers.
ReplyDelete