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Thursday, 20 February 06:33 (GMT -05:00)

Business And Politics News

U.S. Oil Export May Destroy Russia’s Energy Superpower

Experts say that Russia’s status as an energy superpower is all about its ability to export energy carriers to the global market. With that being said, the status is in jeopardy since oil prices are ultra-low and still may crash even further, thereby making oil production more unprofitable for Russia.




At the same time, the international expert community assumes that the USA’s shale oil revolution has already put an end to Russia’s hopes to become the world’s leading energy exporter in the future. For now, we know that Russia’s budget consists mostly of the revenues made from energy export. They say that the Russian economy is heavily dependent on oil and natural gas exports, which makes it extremely vulnerable and undermines the country’s energy security these days when oil prices are around multi-year lows. At the same time, Western experts obviously put the blame for this excessive dependence on President Putin.
In particular, the remind us that President Putin was actively promoting the idea of diversifying the income sources making up for the Russian budget and reducing Russia’s oil dependence. However, more than 15 years later, we have reasons to say that those were just empty promises that have never been realized. At the same time, they say that this ambitious diversification couldn’t have been realized in practice since Russia had never had a well-developed private property institution. Apparently, Russia has oligarchs, big and small businesses. However, the thing is that those businessmen lack stimuli. Moreover, they are perfectly aware of the fact that any highly successful business in Russia can be expropriate sooner or later.
With that being said, experts tend to think that Vladimir Putin is now using energy carriers as a political weapon. Within the framework, the role of an energy superpower implies strength in the international political arena. Exporting energy carriers to many countries means political benefits, which is something the Russian President is perfectly aware of and is trying to capitalize on it extensively. Still, experts say this approach is a double fault. Simply put, they mean Putin’s faith in the fairy tale about Russia as an energy superpower as well as his perception of this status as an equivalent to a superpower in a wider sense - geopolitics.


So, the USA has become an oil and natural gas exporter. This took place a couple of years after the so-called shale revolution. This fact alone is said to have put an end to Russia’s energy model of economic development. Apparently, no expert dares make any statements or predictions with 100% certainty maid today’s uncertainty and instability in the international markets and economies. The situation may change at any point in the future. For example, we cannot exclude any possibility of a crisis in Saudi Arabia or Iran. But one thing is sure: without considerable profits from energy exports, Russia is not going to be able to sustain its economy over a long period if the prices are still that low. Even if President Putin doesn’t lose his power, plain folks in Russia are definitely going to see their living standards deteriorate as the situation gets worse. For now, experts report about a 15% decline in Russia’s standards of living. Now, when the USA is a major oil exporter, the Russian economy has fewer chances to recover. With that being said, Russia’s geopolitical ambitions are definitely going to encounter much stronger resistance in the future, especially as the technological progress is definitely going to make shale oil production much cheaper over time.


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