EconExtra is a series of posts that go beyond the textbook, relate current events and recent developments in the economy to content standards, and provide resource suggestions to help you incorporate current events into your lessons.

War is not a topic often discussed outside of history class. However, the Russian invasion of Ukraine is an important event in the world and has highlighted a number of issues that can be placed in an economic framework, such as supply and demand, elasticity and substitution, international trade, the role of central banks and foreign exchange. . The problems fall into three broad categories: commodity prices and world markets, sanctions and corporate withdrawals from Russia and boycotts of Russian affairs, and the financial situation in Russia with the ruble collapsing, the stock market closed, and sanctions essentially affecting the Russian economy. to freeze. assets of the central bank. Related to this third issue is the role cryptocurrency can play for both parties.

Below is a brief description of the current situation for each category, with at least one reference article for students to read for detail. Choose the topic or topics that are relevant to your current curriculum, or something students have asked about. Suggested discussion questions for each topic/subtopic can be found below the description.

Raw materials/world trade threatened by war

Oil and natural gas

The commodity that gets the most press in the US is oil. Russia produces 10% of the world’s oil. It includes 7% of US imports and as of this week, the US will stop buying Russian oil. Oil prices started to rise as the conflict loomed, and gas prices in the US have reached their all-time high. American oil companies have also indicated their intention to withdraw from Russian investments, although it is not clear how and when they will actually do so. All oil wells are assessing their capacity to increase production to fill the gap. On Wednesday (3/9), the oil price had stabilized and fallen from its recent high. Russia has said it would honor contracts, but the impact of those shunning Russian oil remains unclear. (CNBC) There is much speculation about where the oil market will go next.

Europe relies much more heavily on Russian oil and natural gas. The EU has promised to get rid of Russian oil and gas, but cannot do it overnight. They get 30% of their natural gas from Russia. CNBC explains the current situation.

1) Using the basic concepts of supply and demand, elasticity and substitution, explain the difference between the expected effects in the US and Europe of eliminating (US) or reducing the supply of oil (and natural gas for Europe).

2) Europe relies on Russia for oil and natural gas. Russia relies on the money from the sale of its oil and natural gas. Which side do you think has the upper hand here and why? What options (sources for Europe, markets for Russia) does each party have?


“Russia and Ukraine together account for almost a third of global wheat and barley exports. Ukraine is also a major supplier of maize and the world leader in sunflower oil, which is used in food processing. The war could reduce food supplies as prices are at their highest level since 2011.”

This Times Of Israel article provides an international perspective on this threat. US supplies, which produce more than they need and import some from Canada, are not directly threatened. However, if the world’s supplies are disrupted, the price will be.

1) Using the basic concepts of supply and demand, elasticity and substitution, explain the difference between the expected effects of grain shortages in the US and any other region of the world.

2) Follow the path from the beginning of the war to possible global famine. Which parts of the world are most at risk?


Nickel is an important input for stainless steel batteries for electric vehicles. Russia is the third largest producer in the world. The price of nickel more than doubled to over $100,000 a ton before trading on the London Metals Exchange was halted. It is a market that is not only driven by supply and demand, but players on both sides often speculate on price. Again, CNBC explains the situation and explains well what is going on with short selling. Yahoo Finance explains the role of electric vehicle demand in all of this.

1) How much of the nickel price increase do you think is due to the potential supply shortage, and how much do you think is due to speculation?

2) What do you think will happen to the supply, price (and demand) of electric vehicles?

Corporate Response to the Invasion of Ukraine

Here are some fairly up-to-date lists of companies that have ceased operations in Russia. Morning Brew offers a list of retailers. Axios has compiled a list of global companies that have curtailed or discontinued their operations in Russia. Yahoo Finance, on the other hand, provides a list of companies that will continue to operate in Russia. Forbes comments on companies withdrawing. Some follow or anticipate sanctions that would prohibit their activities. For others, public relations is an important driver.

1) If you were the CEO of one of these companies, what factors would you consider when deciding what to do with your business in Russia?

2) Consider closing one of your favorite businesses on this list. How would that affect you? What impact do you think the cessation of Russian operations will have on the average Russian citizen?

The Russian Central Bank and Global Sanctions

Between this CNN article and this episode of the Indicator (Planet Money/(NPR)) explains how the ban on dollar transactions with Russia is expected to impact the Russian Central Bank and limit how Russia “Fortress” Russia. $640 billion in foreign reserves it has built up in an effort to be “sanction proof.” In addition, Russian banks were locked out of the SWIFT system through which banks around the world communicate to facilitate transactions. (Reuters) The ruble’s value fell by half and the Russian stock exchange was closed. (You can view the ruble’s current value here.) The AP released a comprehensive overview of the economic situation and prospects for Russia and its people given the sanctions and the declining ruble.

1) Which transactions are exempt from the sanctions? Which country has not sanctioned Russia?

2) What portion of the $640 Billion “Fortress” is actually accessible at this time?

3) How does the depreciation of the ruble affect the country? What impact will it have on Russian citizens?

The role of Crypto in this war is something new.

This Wired article provides an in-depth yet accessible description of the role cryptocurrency is playing in the war. Ukraine has encouraged donations in cryptocurrency. The government uses crypto holdings to fund the military, and private organizations accept crypto for humanitarian aid. As for Russia, the question is whether the use of cryptocurrency will help the government or individual citizens to circumvent sanctions imposed on them by the rest of the world.

1) Based on what you know about cryptocurrency and what you have read in this article, could you have suspected that cryptocurrency would play a role if war broke out somewhere in the world? Why or why not?

2) What are the concerns about the use of cryptocurrencies in Russia? Crypto exchanges appear to comply with sanctions against the Russian government and said individuals, but not necessarily against all Russian citizens.

This post EconExtra: Economic Consequences of War

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