Putin’s Oil?

By Jennifer Ciotta, Author and Editor, Greater New York City Area

Subject Matter/Language Editor: Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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Oil, Putin’s or Lorenzo’s, is not the cure-all for the world’s ills.

Still, as we all know, Vladimir Putin stands his own large ground, outside the Lone Star State – the Republic of Texas, on the world’s oil and gas. He does not like to give-in to the West.

Let’s get one thing straight: Putin, similar to all of his colleagues at the helm of their nations, loves his country and power. He also loves money, which no longer makes him a communist. He, however, unlike many of his colleagues in the world leadership pantheon of the G20, is an authoritarian. He has enjoyed a relatively smooth presidency and premiership until the recent protests, which were ignited by those in the Russian middle class who are struggling in the uncertain global economy.

What has then kept Putin afloat all these years? I’ll give you a hint: It causes wars, drives men to kill and if you find it in your backyard, you would be very excited too.

Oil, since the days of Colonel Edwin Drake, and natural gas which had permeated Winston Churchill’s iron curtain during the Cold War, have mostly propped up the Russian economy because of the largely untapped oil reserves elsewhere in the Middle East and Brazil.

Russia, despite not being anywhere at the top of the list in global oil reserves, is heavily bankrolled by oil (Fareed Zakaria, “How Oil Is Propping Up Putin,” February 9, 2012):

“The price of oil when Putin came to office was $27 a barrel. From that point it began an almost unbroken rise and is now $116. And oil is the lifeblood of Russia’s economy, providing two-thirds of its exports and half of federal revenue. It’s not just oil: 85% of Russia’s exports are raw materials or primary commodities, and their prices have also risen to unprecedented levels over the past 10 years.”

Oil provides half of Russia’s federal revenue. Imagine that. A financial adviser would wave his finger at Putin: “[t]he oil price needed to balance Russia’s budget has risen from $34 a barrel in 2007 to $117 this year, and outside estimates of the price that Mr. Putin will require to meet his pledges range from $130 to $150″ (Editorial, “Vladimir Putin’s Tears,” March 6, 2012).

Putin, who rose through the ranks of Russian power through Russia’s intelligence establishment, is the shrewd beneficiary of the world’s unquenching thirst for oil.

It is only natural for Putin and the global oil lobbies to hope that we will all remain addicted to oil and that the world will remain addicted to the US dollar, though the time for both may soon be coming to an end because of the G20, which includes (the) US but with the opposite problem: we want oil prices to drop every time they rise. So obviously, oil is a major problem for both the United States and the Russian Federation.

Russia has not yet diversified its energy “portfolio” even though he has spoken about energy diversification to conserve Russia’s natural resources farther into the future just as King Abdullah of Saudi Arabia also has. Diverse energy sources have the potential to create more jobs for both Russia and US.

Exceptions, in rhetoric only, such as the now disgraced BP, and Chevron which was asked to leave Venezuela by Hugo Chavez’s CITGO (Venezuela supplies heating oil to poor people’s homes in Boston, at the behest of Robert F. Kennedy Jr., in winters) have forced the world’s oil industry, a century after Rockefeller’s Standard Oil breakup in 1911, to finally begin trodding the fine line between oil’s abundant present and its scarce future.

I know my readers are interested in seeing US and Russia sort out their differences in a peaceful way. America’s and Russia’s common interest lays in leading the world on diverse sources of energy, beginning with clean coal.

Naysayers will exclaim: “Clean coal and energy diversification out of oil will never happen!” Russia contains the world’s second largest coal reserves (United States has the most unused coal in the world). US needs to stimulate its economy, and so does Russia.

World War II Nazi technologies of weapons and space which led to the Cold War military standoff in the American and European West and East can now give way to post-Cold War competition in clean coal and energy diversification, also with roots in Nazi Germany.

US and Russia have plenty of land to build research facilities, factories and new towns to support more of the global population. First, however, their own people are out of work and eager to return to the workforce. They are intelligent, capable, and can learn by doing despite technical change which is not equitably benefiting the global economy, to run future diverse energy businesses, including in the oil industry which needs the revenue from high prices to diversify into new energy sources.

Putin and Obama would greatly improve their standing in the eyes of their respective citizens if they compete constructively in a forward-looking manner.

Jennifer Ciotta is the author of I, Putin (Vladimir Putin novel). She has a Master’s degree in Russian studies and creative writing from the Gallatin School at New York University.


About Chandrashekar (Chandra) Tamirisa

This entry was posted in Energy Policy, North America and Caribbean, Russia and Eastern Europe, Transformations LLC and tagged , . Bookmark the permalink.

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