god hates mini-hitlers: tanking oil price a catastrophe for the putin regime

Reaganite Republican ^ | 15 October 2014 | Reaganite Republican

[Reaganite Republican]

With oil barely holding on to the $80s, the Kremlin's current leadership faces the same problem they did in the (19)80s: budget revenue half-derived from oil exports, and their backwards, inefficient economy still doesn't produce anything that anybody outside of Mother Russia is willing to spend money on- except perhaps mediocre vodka...

And when the self-deluded Russians start babbling about 'greatness' while bullying poor, semi-defenseless countries on the borders of their shabby empire, they tend to get a little caught-up in things... and put the pedal-to-the-medal until they are defeated -i.e. Afghanistan- or simply go-broke, i.e. 1991.

Yes, compared to America and her massive debt, the Kremlin's coffers appear absolutely flush- foreign reserves of $450 billion
(and that's actually a 4-year low) make us look like the spendthrift fools we are.

BUT that can all disappear in a big hurry, especially if you're trying to prop-up a sliding currency, or keep the masses opiated with a domestic-spending budget that's substantially funded by oil revenues. Consider that the Kremlin is already running a 10.3% budget deficit, and that $105/bbl is what it would take to balance the budget this year- alas, back in reality, a barrel of light, sweet crude barely brings $81 today.

When oil prices dropped precipitously in 2009, Russia's GDP lost 8% at the drop of a hat. (every dollar shaved off the price of a barrel of crude oil costs them more than $2B annually). This likely would have already been disastrous for the Putin regime five years ago, but oil prices rose again the following year 2010, propping-up the government with annual growth rates of 3-4%...
enough to keep most Russians away from the protest movement, anyway.

Note that a populace deprived of consumer goods in the 1980s
-to fund Cold War military spending in an attempt to keep up with Reagan- was the final morale-breaker among the Soviet populace, leading to a reformer and subsequent collapse of the system.

But rather than crappy, plastic consumer goods produced in the USSR, today's Russian elite -the ones who keep Putin in power- depend on imported cars, food, fashion, and booze to keep-up-with-the-Jonesoviches. Alas, a weak Russian currency, brought on by foolhardy military adventure, US/EU sanctions, and now a collapsing oil price make all those things cost much, much more in now-also-collapsing Rubles.

Sanctions over Crimea/Ukraine have also bit hard, and Russia may also soon be forced to further tap its hard currency reserves to bail out companies prevented from borrowing money on international markets
(by Western sanctions).

Another parallel with '91 might be the intellectual bankruptcy of the current regime- Reagan had made it painfully clear that the creaking Soviet system could never truly compete with the United States economically, militarily, or particularly in technology/innovation... and that Bolshevism offered nothing for the future. So what the hell does Putin stand for, besides pompous arrogance, aggression, and greed?

At very least, the expensive military modernization/expansion -backbone of Kremlin pride and power under Putin- is likely already finished. But outside of re-establishing a rump USSR in some form of alliance/customs union...
who needs Vladimir Putin around?

Anyone taking any bets where the Russian president's towering 86% approval rating will stand a year from now (if still alive and in power)?

[Reaganite Republican]

***ping***

[Lee'sGhost]

I thought this was about Obama.

[Dr. Sivana]

their backwards, inefficient economy still doesn't produce anything that anybody outside of Mother Russia is willing to spend money on- except perhaps mediocre vodka...

Not true! There is still a market for Russian arms, caviar and minks. Real proletariat stuff.

[ken5050]

And let’s not forget concern and compassion for the Saudis..

[SeeSharp]

Not true! There is still a market for Russian arms, caviar and minks. Real proletariat stuff.

And Russian girls. Though I think it is mostly Turks and Egyptians who buy them now.

[southernmann]

I always thought God was incapable of hate?

[RayChuang88]

In short, Putin realizes that future petroleum sales will most likely going to China. China would especially welcome a steady source of natural gas so they can phase out their highly-polluting coal-fired power plants.

[GladesGuru]

Russia does produce guns and ammo for which there is a demand world wide.

Here is America, Russian arms such as the Saiga-12 shotgun, and ammo of several brands are in high demand.

[TexasGunLover]

It will also be a disaster for us. We’ll start reducing shale rigs shortly, no choice, as it’s cheaper to buy overseas than it is to pull it out of the shale here.

[Grampa Dave]

One of the best kept secrets with the crisis in Iraq/Syria/? and other oil producing countries, is how the price of gasoline and oil in America keeps coming down.

Increased U.S. production is helping to create an oil surplus on world markets, driving down prices despite a myriad of threats to oil supplies, and doing more to crush Russia’s economy than the sanctions imposed by the U.S. and European Union, said Chris Faulkner, chief executive of Breitling Energy.

http://www.washingtontimes.com/news/2014/sep/8/us-oil-surplus-eases-prices-in-global-crises/?page=all

This is also preventing the Opecker Princes from doubling their price on oil to again cause another major economic recession around the world as well delivering severe kicks to Putin below his economic belt.

[Reaganite Republican]

Probably doesn’t like him too much neither...

[Grampa Dave]

One of the best kept secrets with the crisis in Iraq/Syria/? and other oil producing countries, is how the price of gasoline and oil in America keeps coming down.

Increased U.S. production is helping to create an oil surplus on world markets, driving down prices despite a myriad of threats to oil supplies, and doing more to crush Russia’s economy than the sanctions imposed by the U.S. and European Union, said Chris Faulkner, chief executive of Breitling Energy.

http://www.washingtontimes.com/news/2014/sep/8/us-oil-surplus-eases-prices-in-global-crises/?page=all

This is also preventing the Opecker Princes from doubling their price on oil to again cause another major economic recession around the world as well delivering severe kicks to Putin below his economic belt.

[Reaganite Republican]

Yeah- there’s the weapons industry, I should have specified consumer goods, where they only compete on price, otherwise utterly uncompetitive

[Captainpaintball]

Is it not also a precursor to a financial collapse like in 2008?

[pfony1]

One of our FRiends on an earlier thread, suggested a tax on imported oil to protect our shale oil producers from “predatory pricing” by the Saudis.

The tax would create a “floor” price, say $90 per barrel.

Then, if the Saudis tried to steal US market share (and bankrupt our new US producers) by pricing their oil at $75 per barrel, the “import tax” would add $15 to each “cheap” barrel.

I really like the idea of US energy independence.

Are the Saudis really our friends?

[Lee'sGhost]

...and that this is happening DESPITE Obozo’s best efforts to prevent oil production in the U.S.

Libtard media leaves that point out for some reason.

[Grampa Dave]

“.and that this is happening DESPITE Obozo’s best efforts to prevent oil production in the U.S.”

Yes, in spite of Obozo and his green anti America thugs, American ingenuity has driven around the obstacles and lowered the price of oil by increasing our supply of oil.

[Sam Gamgee]

Exactly. As much as I applaud the continuing irrelevance of Russia a relative strong oil price is good for geopolitics of the US and Canada.

[SeaHawkFan]

It is not a disaster when oil prices go down, except for the oil industry. Even at $80/bbl, pumping oil is profitable.