Posted on 12/05/2002 10:37:13 AM PST by BOBTHENAILER
Vladimir Putin is settling into a rich niche in the world economy. This week, the Russian president finds himself pen in hand, about to sign a deal to build a $2.5. billion oil pipeline to China. Only weeks before, he and Russian crude were a hot topic in Washington.(What's this oil pipeline to China? I thought we took Afghanistan for the main purpose of getting Caspian Sea reserves to market)
As the U.S. looks for new and reliable energy supplies, Russia is finding new and reliable sources of income. The country sells five million barrels of crude and oil products per day on the international market, second only to Saudi Arabia. But as the U.S. moves to reduce dependence on the Middle East by increasing its strategic oil reserves and providing incentives to new production, those numbers are headed skyward. In the last two years alone, Russian oil production has risen by more than a million barrels per day. Saudi Arabia, by contrast, has been unable for the last 20 years to increase its production capacity. Four of Russia's biggest oil companies last week announced plans to build a $1.5 billion Arctic oil port that could supply as much as 10% of American crude in the future.(But wait a minute, isn't the Bush/Cheney cartel merely attacking Iraq so we can get access to their crude oil? What's up with this?)
Still, it hasn't been an overnight success story for the country. Russia has for years sought to limit the power of OPEC. And President Putin made the development of Russia's vast energy resources a priority on taking office in 2000 -- with some notable successes. But the emerging U.S. approach -- shaped by the Energy Department last summer and reflected in the energy bill currently going through Congress -- fits Russia to a tee. Its major oil firms are claiming a growing share of the European and U.S. markets, where their prices are competitive. Russia's oil magnates, who won control over these firms in the early days after the Soviet collapse, are starting to act more like proper owners by investing in increased production.
By tapping Western technology to maximize production at existing wells -- rather than investing in costly new exploration -- Russians have driven down the cost of their oil and pushed up profits. Yukos, the second-biggest Russian oil company, pumps its oil within a dollar and change of the legendary low-cost Saudi crude. Its profit margin last year was a stunning $2.97 billion, or 42.5%. Yukos isn't the only emerging Russian success story: Sibneft, Lukoil, and Tyumen Oil belong to this group, too. The new pipeline deals crafted by these companies have also addressed the biggest obstacle to exploiting Russia's oil potential: getting it to the market. Transneft, the state oil transport monopoly, has upgraded the pipeline system. The newly built Baltic pipeline has the capacity to transport 240,000 barrels per day to the Western consumer.
This inflow is the first natural alternative source. While Russia produces 7.1 million barrels per day, it only exports 5 million barrels. In comparison, the Saudis export 7.4 million barrels, about equal to their total production. If oil prices were set by the market and not the OPEC cartel, the share of Saudi oil on the U.S. market, currently at 15%, would drop by half(but, but, I thought the Bush/Cheney cartel loved the Saudis because they made so much money off of them). This is good news for Russians eager to cash in. Several months ago, Vice President Cheney voiced support for using Russian oil to fill U.S. strategic oil reserves to the proposed capacity of 700 million barrels.
A U.S.-Russia energy alliance, if exploited to the full, would be great for consumers. By streaming between five million and nine million barrels per day of unchecked private Russian capacity on the international oil market in the near future, the international price of oil would quickly fall below the OPEC minimum target of $25 today(That can't be! How can the Bush/Cheney cartel make any money if crude is less than $25 per barrel a day, I just don't get it). American investment can help turn Russia's oil sector into a highly competitive one. Russia desperately needs the outside capital even though, until recently, it hasn't treated its investors well. According to the Russian Energy Minister Igor Yusufov, the Russian energy industry needs around $50 billion between now and 2010 for expansion.
No tears will be shed in Washington or Moscow over OPEC's demise. The U.S. doesn't appreciate the cartel's spotty record in providing steady supply at a stable price. The Russians see a cartel that protects national oil industries, when their own industry is dominated by asset-rich private entities competing against each other. By helping Russia's private energy companies become a global force, the U.S. can kick its Middle Eastern oil habit, and maybe bring down OPEC in the process(but, but, I thought the Bush/Cheney cartel was deeply in bedded [pun intended] with OPEC).
Read 'em and weep, oil conspiracy suckers.
I'd prefer our own domestic sources (see: This Land Is Our Land).
This is posted as stated.....for the DU/ It's All About Oil crowd.
Offshore Western Africa, Indonesia, offshore Eastern South America, etc., etc., will all help to ensure the demise or marginalization of OPEC.
You want cheap crude or not?
Diversifying oil interests around the world can only help the US- and everyone else. The key, however, is to reopen refineries here in the States. The largest amount of money we spend on oil is to have it refined elsewhere. If we do it ourselves, we save the money and create more jobs. Of course, the environmental wackos would hate this, which to me, means it will be good for all.
Very well said. As you know, we've had two huge refineries closed in Michigan in the last five years.
Now we have NONE. Isn't that special.
I say reopen refineries in key locales around the US. Have one in each region (midwest, south, east, west,) and make sure these refineries have direct access to shipping lines whether it is water, river, rail or road.
We cannot be free of foreign energy until we build the infrastructure to support that independence.
Too bad your average liberal can't GET IT.
Such a simple solution, one in each region.
Comrade, your command style approach to infrastructure improvement will undoubtably meet the pilotburo's approval. Should we call your plan a New Economic Plan, or a Five Year Plan, or do you have a better title for introducing more communism to the United States. How about a New New Deal...
There is always ANWR, my friend.
The sources will continue to grow, as need increases. Regrettably, the country of origin will not always be at your choosing. Oil is where it is.
How about letting the market dictate the building and operating company of the necessary refineries Rintense proposed. Common sense proposal for any easy solution. Not worthy of the communism taint.
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