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Politics : Foreign Affairs Discussion Group

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To: LindyBill who wrote (58484)	11/23/2002 2:14:17 PM
From: frankw1900	of 281500

And I read that the Russians need 21 to make a profit. So I suspect that is where the price will be held. According to the excellent article in March/April 02 FA [FL will like that], Russia is not nearly as dependent on oil for its prosperity as Saudis. There is a follow up discussion in current issue foreignaffairs.org There have been a number of newspaper articles posted here the last few days talking about the 'dependence of moribund Russian economy on oil' and no evidence produced backing up the idea. I have no idea exactly what shape the Russian economy is in, but Russia now has a flat tax and has legalized private property. Government revenues have increased since the introduction of the new tax regime so I suspect the economy has improved. If the price of oil goes down it means for the Russians they will not have to subsidize domestic energy consumption as much as they are now. In fact a good argument could be made that the cheaper the price of oil, the more the Russian economy will improve as lower oil prices make domestic production in non-oil sectors more viable because imported goods will be more expensive.

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