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Page added on November 17, 2017

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Can Russia Break Its Oil Dependence?

Production

Despite improving oil prices, Russia’s economic growth is slowing, with GDP rise for the third quarter at 1.8 percent on an annual basis, versus 2.5 percent for the second quarter, Russia’s state statistical bureau, Rosstat, said earlier this week. Analysts say it’s the latest indication that Russia’s economy needs major reforms.

Let’s state the obvious: Russia needs an economy overhaul that will reduce the contribution of oil to its budget revenues. This overhaul is something that the central bank governor Elvira Nabiulina put a price tag on last year, warning that without it, GDP won’t be able to grow at a rate of more than two percent even if oil prices jump to $100 a barrel.

There is ongoing work on that overhaul, but it needs to speed up. Even so, analysts have points to make regarding that Q3 figure, and these notes aren’t about oil. For starters, Capital Economics says the reason for the GDP growth deceleration was a slowdown in the growth of the industrial production sector. Then, Goldman Sachs pointed out that when adjusted for calendar differences, the Q3 GDP increase was actually 2.4 percent on the year.

Now, some would say that for a country that only came out of a fairly serious recession late last year, Russia isn’t doing too poorly. It’s certainly not as dependent on oil revenues as some observers would like to believe. In fact, Russia is becoming the dominant force on another commodity market: wheat. Agriculture as a sector is a top priority for the Kremlin, especially in the aftermath of European sanctions that Russia responded to in-kind, banning a lot of food imports from the EU.

Diversification is good, but Russia’s current economic growth isn’t a result of diversification of revenue streams, but of greater consumer spending—and this consumer spending, analyst Leonid Bershidsky says, is built on borrowing.

Russia has seen an increase in real wages for more than a year now. This year, the central bank reduced interest rates as the economy got back on a growth track. Consumers are more confident. This has prompted consumers to borrow more, Bershidsky explains. They borrow more to spend more, on everything from food to real estate.

This state of affairs is actually sustainable, analysts note, but it doesn’t make for growth acceleration. Higher oil prices aren’t helping, either. It’s the same as with Saudi Arabia and all the other large producers: the higher the price of oil, the greater the temptation to slip back into the rut you’ve known for decades.

Can Russia resist the temptation? It’s hard to say, but it certainly has a strong motivation to do just that. Not just because of Nabiulina’s warnings, but because the fruits of diversification are evident: this year, Russia became the world’s largest wheat exporter. Perhaps too much of a focus on commodities is unhealthy for the long run, but on the other hand, if you’re rich in commodities why not put them to the best use you can?

oilprice.com



126 Comments on "Can Russia Break Its Oil Dependence?"

  1. Cloggie on Sat, 18th Nov 2017 3:04 am 

    @Greg, Houston was build before the rather new phenomena of rain bombs, so I won’t blame them for that. The point is, it is very well possible to protect Houston to a large degree against these devastating floods via proper drainage and provide large parking spots at higher and tilted locations. Not sure why that would be a sign of “god syndrome”, just down to earth common sense and engineering:

    https://www.pri.org/stories/2017-08-30/dutch-have-advice-how-houston-can-plan-future-flooding-events

    (sorry for the plug, but we happen to be the most advanced nation as far as water management is concerned, out of pure necessity)

    And America is very well up to the task of dealing with the mess, with or without Dutch consultancy, were it not that Washington insists on being the “policemen of the world”, without having the resources for that megalomaniac task.

    Solution: scale down that useless bloated military, buddy up to the Europeans and Russians and concentrate on your domestic problems. Or: become a normal country that lives within its means.

  2. Theedrich on Sat, 18th Nov 2017 3:16 am 

    Normal???  But America is the “indispensable nation”! Normal is not possible here. Much better to be a freak show with nukes.

  3. Cloggie on Sat, 18th Nov 2017 3:19 am 

    Those bride and grooms German? Jews wouldn’t do that.

    I still have to make up my mind between boat and supertard, on the matter who deserves a certain award most.

    For diplomatic reasons I’m not going to reveal explicitly what that reward that might be.

    https://www.youtube.com/watch?v=clYwX8Z43zg

  4. Cloggie on Sat, 18th Nov 2017 3:23 am 

    Make that:

    “For diplomatic reasons I’m not going to reveal explicitly what that award might be.”

    Tough Friday night: 4 hours in a museum in Amsterdam and afterwards meeting old friends in a cafe.

  5. Davy on Sat, 18th Nov 2017 4:10 am 

    “Ouch! Germany (#1) replaces U.S. (#6) as country with best global image”
    “Yea, mad kat, what is new but I would say your image is tarnished too lookie you bad boy using a MSM site. Now doesn’t that wreak of hypocrisy with the amount of times you have said these sources are not reliable. I guess not reliable when you are not using them to peddle your agenda. When you use them they are legitimate. LOL”

  6. Davy on Sat, 18th Nov 2017 4:13 am 

    “That is about the same amount paid out for Social security in 2016. Which will be cut first? Lol”
    Mad kat, you should be worried because that is all you have except for the Filipino boyfriend. IMA, no health care and a care in the world like you are going to live your last years without health issues.

  7. Davy on Sat, 18th Nov 2017 4:17 am 

    “My farm neighbors wouldn’t even notice. Nor would I when I live there.”
    First of all mad kat you are never on the farm and there is no indication you have a farm this is why I call it the fantasy farm. You live in a mega region of 20MIL people on an Island that will need resupply to support that many people in such a small space. Here is the population densities:
    http://tinyurl.com/yc8ehp9q

    When that amount of people go on the move nowhere on Luzon Island will be safe. You are in the worst possible position of anyone on this board and you are delusional are pretending you are not.

  8. Davy on Sat, 18th Nov 2017 4:21 am 

    “Been there done that, but there’s no point in trying to explain something to somebody who knows better, that has little to no experience. “
    Widdle, you are talking about yourself or mad kat aren’t you? Because no one on this board is more sure of themselves and demanding respect because of it. Holier than thou shit.

    “If you have the wherewithal, as you mature, you’ll figure things out for yourself, if not, you never will.”
    Look who is talking about themselves and look who is stalking and pricking yet again another American.

  9. Davy on Sat, 18th Nov 2017 4:23 am 

    “The Navy is having real problems these days. And they actually believe they can win a real war. LMAO”

    widdle, mad kat is using MSM now spreading disinformation. You better have a talk with the elder you respect so much.

  10. Davy on Sat, 18th Nov 2017 4:49 am 

    “Solution: scale down that useless bloated military, buddy up to the Europeans and Russians and concentrate on your domestic problems. Or: become a normal country that lives within its means.”
    Kind of funny, dutchy, how you want the US to scale down and your Euroland scale up. Yea, you are talking a huge Euro military to do all that empire work you are fantasizing about.

  11. Makati1 on Sat, 18th Nov 2017 5:01 am 

    Cloggie, Good refs. In a real war the US carriers will be gone the first day. Maybe the first hour. A Russian Corvette can launch missiles. That is all it will need to do.

    I read these articles a while back and even referred one here, I think. The US is a paper tiger with obsolete weapons and tactics. The next war they start is going to come home to America because the oceans are no longer a barrier. Hell is just over the horizon and 20 minutes, or less, away.

  12. Davy on Sat, 18th Nov 2017 5:04 am 

    In my opinion the US has too many aircraft carriers. We need maybe half. I would like the US military to halve and withdraw from Europe and Asia. On the subject of carriers yes they are vulnerable but in today’s world if China or Russia attack a carrier then we can expect a big war to follow. The amount of military losses in such a conflict make the loss of a few carriers mute. China and Russia will suffer similar retribution. Stupid anti-Americans can’t understand that. In the meantime no other nation can project military power like the US. You can argue reductions but you can’t argue away carrier advantages except with your extremism, lack of military knowledge, and anti-American sites. Another misunderstanding of dutchy is most carriers have been built and used for years. They are bought and paid for. Of course saker is going to bad mouth carriers, WTF do you expect a Russophile site is going to do.

    “What is the military advantage of having an aircraft carrier? “
    http://tinyurl.com/yasgfz97
    “Aircraft carriers have the obvious advantages of extended operational range of aircraft, increased reconnaissance & deployment abilities and general power projection (naval muscle flexing).”

    “Why America Needs Aircraft Carriers”
    http://tinyurl.com/ybhsparh
    “Certainly, no ship is invulnerable, but the modern carrier is “least vulnerable among equals” and much less at risk than bases ashore.”

    “Finally, carrier Cassandras worry about vulnerabilities against advanced weapons, including anti-carrier ballistic missiles. “Regardless of the number of carriers national leadership decides to maintain,” wrote retired Navy Commander John Patch, “because they remain the U.S. Navy’s preeminent capital ship and a symbol of American global power and prestige, they are a potential key target for both unconventional and conventional adversaries. However, one inexplicable aspect of the “carriers are vulnerable!” argument, particularly versus the Chinese DF-21 ballistic missile threat, is that while the carrier’s vulnerability is trumpeted, there is little mention of the fact that every ship suffers from similar, if not greater, vulnerabilities – particularly ships built to commercial standards and simply painted haze-gray. This includes platforms on the various lists of options if the Navy were to stop building carriers. It also ignores enhanced passive and active systems––e.g., the cruise- and ballistic-missile defenses provided by the Navy’s Aegis cruisers and destroyers––that are designed to defeat tomorrow’s threats. Finally, to put the entire vulnerability issue in context, land bases, which never move, are much more vulnerable to attack than are mobile naval forces at sea.”

  13. Cloggie on Sat, 18th Nov 2017 5:19 am 

    Kind of funny, dutchy, how you want the US to scale down and your Euroland scale up. Yea, you are talking a huge Euro military to do all that empire work you are fantasizing about.

    I have nothing to “want” behind my computer. All I can do is observe and use my brain.

    The US has 220 million Europeans and spends about twice the amount of money as the EU of 500 million Europeans on a military. A child can see that something is utterly wrong and unsustainable here, on the US side that is.

    I do not advocate a massive EU army or large increase of defense spending, but do support the Macron integration effort, backed by Trump, of 23 existing national armies into one army of 1.8 million soldiers.

    Considering the smaller population size of the US and its European population in particular and the expected vast decrease of spending capability past petro-dollar, a military considerably smaller than the current one of 1.2 million, is absolutely in the cards.

    Of course Americans won’t be persuaded by this and will need to learn the hard way when confronted with reality. Finally a collapse to be believed in.

    Why do we need a European army? Not to keep the Russians at a distance, so much is clear. In the long run as a counterweight against China? Perhaps. To keep Muslims and African out? No, sufficient capacity to do that is available, were it not that the European vassals of the US have no intention to halt this influx, other than out of fear for the rising populists.

    No, the real reason why we need a European army is to have an intervention force available, just in case everything goes wrong in North-America.

    As a cartoonish illustration:

    https://www.youtube.com/watch?v=LT9YKjn67Og

    During the first minute you see American lefties going at the throat of an American right-winger, but at a decisive moment a majestic European intervention deus ex machina arrives at the scene to come to the aid of the beleaguered European-American identitarian and things turn for the better for the latter.

  14. Davy on Sat, 18th Nov 2017 6:00 am 

    “A child can see that something is utterly wrong and unsustainable here, on the US side that is.”
    Who is the childish one promoting empire talk. I am promoting reductions and you are promoting increases. It is simple to see who is playing the games here.

    “I do not advocate a massive EU army or large increase of defense spending, but do support the Macron integration effort, backed by Trump, of 23 existing national armies into one army of 1.8 million soldiers.”
    Sure you do it just matters of your agenda de jure you are peddling. If you want to look Euro tough it is a big increase. If you are wanting to promote the US as way too big and Europe better sized then you speak in smaller numbers. You are all about appearance and little on facts.

    “Considering the smaller population size of the US and its European population in particular and the expected vast decrease of spending capability past petro-dollar, a military considerably smaller than the current one of 1.2 million, is absolutely in the cards.”
    Military sizing is not based on population size criteria dutchy any general would laugh at you. The other fallacy of yours is talking of Europe as a nation. It is multiple nations and there is no guarantee even a few of those nations are going to form a common army like you want to see. IOW, you musing in a fantasy world at the moment. Nothing has happened but talk.

    “Of course Americans won’t be persuaded by this and will need to learn the hard way when confronted with reality. Finally a collapse to be believed in.”
    What collapse? OH, you mean your fantasy collapse of the US in a vacuum and the grand Eurotard army comes over to the rescue to mop up the poor Euro whities left in this destroyed landscape. I imagine when this collapse comes you Euro’s will be at each other’s throat like you have been for hundreds of years. Your many little armies will be plenty occupied.

    “No, the real reason why we need a European army is to have an intervention force available, just in case everything goes wrong in North-America.”
    LMFAO, I would like to see dutchy sell that to his Euro cousins. You would be laughed at and likely get a tomato in the head too. What a joke you are dumb und dutchy.

  15. Cloggie on Sat, 18th Nov 2017 6:31 am 

    The word “cockpit” gets a new meaning:

    http://www.spiegel.de/panorama/usa-pilot-malt-penis-an-den-himmel-mit-kondensstreifen-a-1178708.html

    US pilots shows that their aircraft are sufficiently potent.

  16. deadlykillerbeaz on Sat, 18th Nov 2017 7:00 am 

    2,941,333,333.33 bushels of wheat harvested in Russia.

    Farmers will gather more wheat and corn than ever before, while the barley crop will be the largest since 2008, ProZerno figures show. Those estimates may go higher still as Siberia collects more grain, with potential for wheat output to reach 85 million tons, Petrichenko said.

    https://www.bloomberg.com/news/articles/2017-08-21/soviet-era-grain-record-seen-tumbling-on-bumper-russian-harvest

    At 40 bushel yield per acre, you will have 74,000,000 acres of wheat crop. Probably all of Illinois, Indiana, and Iowa in wheat.

    You are going to have to have fuel oil to raise 74,000,000 acres of wheat. Can’t raise that much grain without machines and implements. You’ll need fertilizers and pesticides, herbicides, fungicides, and a good wheat seed. Seeded at a bushel to the acre, you’ll need 80 million bushels of wheat seed at 95% germination.

    Fortunately, there is crude oil to help with the task to get that stuff done, you know.

    Ain’t nothing going to get done on the scale of modern industrial agriculture without oil in the energy mix. Forget it, it won’t happen.

    Just a better world for the Russians. Just plain luck sometimes is the only answer. Good for them.

    Saturdays are for drinking.

    About that oil dependence, the US at one time exported 40 percent of its oil. So there is nothing wrong with oil dependence.

    How to catch ocean fish and overfish the oceans:

    https://m.youtube.com/watch?v=UlOtjxufybM

  17. Davy on Sat, 18th Nov 2017 7:56 am 

    Dutchy, redundant post Mad Kat covered that already. Don’t you read Mad Kat post?

  18. MASTERMIND on Sat, 18th Nov 2017 7:56 am 

    Madkat sorry the organicprepper is fake news you dimwit..LOL you are so freaking dumb and old the in internet is not for you

  19. Cloggie on Sat, 18th Nov 2017 7:59 am 

    Dutchy, redundant post Mad Kat covered that already. Don’t you read Mad Kat post?

    I do not read every post. I’m more of a broadcaster rather than a receiver by nature.

  20. Ghung on Sat, 18th Nov 2017 8:43 am 

    “I do not read every post. I’m more of a broadcaster rather than a receiver by nature.”

    Yep. My Momma warned me over 50 years ago about people who love to hear themselves talk and never listen. Said they never have much to say worth listening to.

    She was a wise woman, my Mom.

  21. Cloggie on Sat, 18th Nov 2017 9:14 am 

    Never said that I do not listen, but there are so few here who actually have something to say of interest.

    Listening is good, but wasting time is a cardinal sin.

  22. GregT on Sat, 18th Nov 2017 10:33 am 

    “widdle, mad kat is using MSM now spreading disinformation.”

    The story is prevalent throughout the entire MSM. Perhaps the US Navy should issue a statement to set the record straight, instead of issuing an apology, and grounding the aircrew responsible.

  23. Davy on Sat, 18th Nov 2017 11:10 am 

    Yea, widdle, I agree Mad Kat is a hypocrite using US, MSM as needed and whining about it as is convenient per his agenda.

  24. GregT on Sat, 18th Nov 2017 11:18 am 

    “Dutchy, redundant post Mad Kat covered that already.”

    As of this morning, it is now being ‘covered’ by not only the US MSM, but internationally.

    https://www.google.ca/search?q=us+navy+sky+drawing&dcr=0&source=lnms&tbm=nws&sa=X&ved=0ahUKEwjCnZKhzsjXAhVE3mMKHcEMDb8Q_AUICygC&biw=1680&bih=985

    Kind of a big deal, when children are able to screw around with multi-million dollar weapons of mass destruction.

    Of course someone of your limited mental capacity, would downplay both national and international concerns, and pretend that it is simply a fellow American of your’s agenda.

  25. Anonymouse1 on Sat, 18th Nov 2017 1:51 pm 

    Indeed you are a broadcaster cloggen-kike. You broadcast non-stop bullshit. Like all ‘good’ bullshiters, sorry, ‘broadcasters’, you tend to filter out anything not in accord with your bullshit.

    Like, reality, for example.

    You promised to get your post count down to zero, get on that would you. Or, was that just more of your ‘broadcasting’?

    Moron

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