Oil 1 Peak Oil 21
Uniqueness Russian econ high-oil
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UniquenessRussian econ high-oilRussia’s economy will remain high unless oil prices decline Monsters and Critics Business Apr 9, 2008 “Russia, an island of stability amid turbulent markets” http://www.monstersandcritics.com/news/business/features/article_1398923.php/Russia_an_island_of_stability_amid_turbulent_markets Moscow - Like a teenager at the wheel of his diamond encrusted Mercedes, Moscow feels invulnerable, set to swerve past the US housing slump and slam through the global credit crunch. And today's precious fuel prices have armed Russia's economic heavy foot. 'Nothing bad, nothing awful will happen,' Vladimir Bragin, an analyst at Trust Bank, said blithely. 'If Russian oil prices remain relatively high, there'll be no problem.' Russia's economy in blush is underpinned by plentiful commodities, strong growth spurred by a consumption and investment boom and a banking system that is largely insulated from the paucity of money that has threatened lenders in other markets. 'This is an unusual global slowdown in the sense that it hasn't hit Russia's main export commodities,' agreed Rory MacFarquhar, a managing director at Goldman Sachs, which 'very bullish' on commodities predicted last week that oil prices could spike as high as 175 dollars per barrel in the long-term. The Russian economy is high now – a decrease in oil prices would collapse it Hudson Institute Study Group on U.S.-Russian Relations 07 “U.S.-RUSSIAN RELATIONS: IS CONFLICT INEVITABLE?” http://www.hudson.org/files/pdf_upload/Russia-Web%20(2).pdf) The economy Putin is leaving to Russia looks impressive. Gross domestic product has risen during his presidency from $200 billion in 1999 to $920 billion in 2006 (in current dollars); the gold and currency reserves have risen from $12.7 billion in 1999 to $ 303.86 billion in February 2007. The reserves of the Stabilization Fund, into which oil revenues are deposited, have reached $70 billion. In 2006 the trade profit was over $120 billion, and the budget profit is 7.5 percent of gross domestic product. The Russian economy is now the twelfth largest in the world. Although since 2005 economic growth has been slowing down (from 10 percent in 2000 to 6.8 percent in 2006) it still looks fairly impressive. A boom is continuing not only in the extractive sectors of the economy but also in construction, trade, and the service and banking sectors. Russian business has shown it is able to organize large scale production, successfully competing against international corporations. Russia, which in the 1990s had humiliatingly to beg for loans, repaid her debt to the Paris Club ahead of time. The number of major businessmen in Russia is increasing more than twice as fast as in the U.S.: in 2005 the number of dollar millionaires in Russia grew by 17.4 percent as against 6 percent in the U.S. However, like everything else in Russia, the economy has a false bottom. The causes of the economy’s success give no grounds for optimism, mainly because it is associated with high oil prices and has partly been achieved by sectors protected from foreign competition. A collapse of the oil price could plunge the Russian economy into recession, and people remember what a fall in the oil price means. Yegor Gaidar has repeatedly reminded us that the sixfold decrease in the oil price in 1986 led to the collapse of the USSR, and the twofold fall in 1998 caused a financial crisis that almost finished off the barely breathing Russian economy. Russian econ high-oilRussia’s economy has exploded BECAUSE OF OIL Nicholas Vardy Chartered Financial Analyst June 26, 2008 [“Busted: 6 Economic Myths” http://seekingalpha.com/article/82827-busted-6-economic-myths, Seeking Alpha: Stock Market Opinion and Analysis, Graduate of Stanford and Harvard Law, Former Fulbright Scholar,] Russia presents a conundrum for the Western good guys. Yes, it is a kleptocracy and a handful of Western investors and Russian companies have been shafted in a high profile way. But thanks largely to the soaring price of oil, the Russian economy has exploded, growing at 9.5% in Q4 of last year and 8.5% in Q1 of 2008. That means that it is nipping at the heels of India, and is hot on the trails of China in the economic growth sweepstakes. Among the BRICs, Russia has been by far the best investment during the past decade or so, with investors clocking 60x returns since the Russian market bottomed in October 1998. Russia is also one of the top markets in the world this year. And here's a factoid that warms the Russian heart: Moscow now boasts a larger number of billionaires than New York or London. Russian economy high now - oil By Peter Cooper is Deputy Online Editor at Emirates Business 24/7 on Friday, July 11, 2008 “Russian economy flourishes like UAE’s” http://www.business24-7.ae/Articles/2008/7/Pages/RussianeconomyflourisheslikeUAE%E2%80%99s.aspx With oil prices remaining high, Russia is enjoying a similar economic boom to the Emirates, and has amassed $500 billion (Dh1.83trn) in foreign currency reserves. GDP has been rising sharply at around seven per cent per annum for the past seven years. And as emerging stock markets like China and India have sold down rapidly since last October, 48 and 35 per cent respectively, the Russian bourse hovers near an all-time high. Russian economy is high now, oil profits allow it to avoid global downturn By Anthony Faiola and Jill Drew Washington Post Staff Writers Thursday, July 17, 2008; Page D01 "Slowing Economy Gives Way to Global Role Reversals" http://www.washingtonpost.com/wp-dyn/content/article/2008/07/16/AR2008071602732.html Contrast that with oil-fat Russia -- a red-hot emerging market. As in many commodity-driven economies in the developing world, soaring energy revenue has largely insulated Russia, the world's second-largest oil exporter, from the turbulence in global markets. Its gross domestic product is expected to grow 8 percent this year, and consumer spending continues to boom, with a 13 percent increase so far this year, according to Troika Dialog, a Moscow investment house. "We are overloaded with money, crazy amounts of money from the energy market," said Mikhail Bergen, a professor at Moscow's Higher School of Economics. Russian econ high-oilRussian econ high – oil markets Polya Lesova Reporter for Market Watch June 16, 2008 The most reliable source where people watch markets around the world all day everday for the whole day never stopping to take a bathroom break, ever. They just sit there in Depends or huggies depending on preference and watch stock tickers, http://www.marketwatch.com/news/story/russias-economy-grows-85-first/story.aspx?guid=%7B62BBC950-CAC2-4D98-B4C9-42472807EBD1%7D First-quarter growth in Russia, which boasts one of the best performing emerging equity markets, surpassed market expectations of 8%. However, the figure marked a slowdown from the 9.5% growth rate Russia posted in the fourth quarter of 2007. "The Street has consistently underestimated Russian GDP over the last three to four years," said Julian Mayo, co-manager of U.S. Global Investors Eastern European Fund (EUROX 15.30, +0.19, +1.3%). "The Russian economy is extremely strong," Mayo said. "People are scrambling to upgrade their commodity-price forecasts. Domestic demand [also] remains verytrong." RSX 53.13, -1.12, -2.1%) rose 0.8% at $55.92. In Moscow, the benchmark RTS stock index closed up 0.4%. The index is up 3.3% this year, making it one of the best performers among emerging markets. Russia's stock market is dominated by oil and gas stocks, reflecting the fact that the country is a big exporter of many commodities -- including oil, natural gas, and metals -- prices of which have surged in recent months. The price of oil, for example, hit a record high of $139.89 a barrel early Monday. For the resource-driven Russian economy, soaring commodity prices have been a bonanza. "It's not a very surprising figure given the kind of prices Russia's key commodity and energy exports are commanding at the moment," said Cameron Brandt, global markets analyst at EPFR Global, commenting on Russia's first-quarter GDP growth. "Russia has definitely been viewed as a more attractive destination this year for a number of reasons," Brandt said. Among those reasons are attractive valuations, a relatively smooth political transition and strength in commodity prices, he said. Dmitry Medvedev succeeded his mentor Vladimir Putin as Russian president in early May. Net inflows into Russia country funds tracked by EPFR Global have totaled $2.8 billion this year. Mayo, whose fund invests heavily in Russia, said that he's optimistic both about the commodity and domestic-demand aspects of the Russian economy. "The market is still relatively attractively valued," Mayo said, adding that equities there are currently trading at a price/earnings ratio of about 11, which makes them among the cheapest emerging markets. Oil prices high nowDemand is driving prices to record highs Josh Funk Associated Press 6/25/2008 , “Buffett: Supply and demand driving oil prices up,” http://www.forbes.com/feeds/ap/2008/06/25/ap5152923.html Billionaire Warren Buffett says he believes supply and demand, not market speculation, is what's driving oil prices to new heights. Oil futures fell Wednesday after the Energy Department said the nation's supplies of fuel and oil were larger than expected last week, but prices remain above $130 a barrel. Buffett told CNBC in a live interview that today's prices reflect a lack of oil in the world. Prices are soaring – multiple reasons AP 6/23/2008 “Oil prices move higher,” CBC News, http://www.cbc.ca/money/story/2008/06/23/oil-prices.html Oil prices continued to rise Monday, despite a pledge by Saudi Arabia a day earlier to increase its production by 200,000 barrels a day starting in July. Light, sweet crude for August delivery gained $1.38 US to settle at $136.74 a barrel in regular session trading on the New York Mercantile Exchange. Analysts said Saudi Arabia's announcement — made at an emergency, multi-nation oil summit there over the weekend — had already been factored into oil prices and was seen by the market as the minimum the country could do. Another factor pushing prices higher is the disruption of oil production in Nigeria. Royal Dutch Shell PLC said Friday that it cannot meet contractual obligations to export oil from the Niger Delta after a militant attack on a pipeline forced it to shut down production from its main offshore oilfield, Bonga. The field produces an average of 225,000 barrels a day. "The oil summit really has not done much to temper oil pricing," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "It was a modest output increase and hardly really compensates for the disruption out of Nigeria." Prices high – political tensions over oil Chris Ray writer for moneyhighstreet 6/25/2008 “Will oil prices crash soon?”http://www.moneyhighstreet.com/feature/446/ Tensions within oil producing nations fuel oil price increases. There are two tension hotspots at the moment. The ongoing threat by Israel to destroy Iranian nuclear capabilities is helping drive oil prices upwards. Iran is a major oil producer and may threaten to shut down its supply in the face of antagonism from Israel. That tension exists between Israel and Iran is sufficient to help maintain oil prices towards the top of its trading range. The other area of concern is the terrorist actions against oil installations in Nigeria. Militants destroyed an oil pipeline last week forcing Chevron to reduce supply by 120,000 barrels a day. Whilst Nigerian oil supplies remain under threat from terrorist action, an upwards pressure on oil prices will continue. 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