Impact Of Energy Subsidy On The Global Markets

As stated earlier, Russia’s economy is largely based on oil. Further, throughout Russia’s existence, its political institutions have strongly remained stable do to their performance legitimacy. Therefore, the rise of oil and therefore competitive authoritarianism are not mutually exclusive. Since Putin’s election, economic growth has averaged 6.7%, however, much of this growth is directly due to rising oil prices since 1998 that have topped over 100 dollars a barrel. Rising oil prices has allowed Russia to eradicate foreign debt, establish massive reserves of hard currency, and create budget surpluses. This has in turn allowed Putin to accumulate massive amounts of wealth as well as improving his performance legitimacy. Arguably, this is a false performance legitimacy. To many in Russia, this is the best the economy has ever been, and it has allowed for Putin to easily consolidate power. Yet, with oil on the decline, Russia has effectively created an economy that can not last into the near future, and only time will tell how far they will end up

Russia’s history has made it the largest territory on earth and its geography has given it a wealth of natural resources.3 Access to vast timber reserves in the center and east of the country, rich fisheries, and vast petroleum reserves are all important resources secured by Russia over its history. Petroleum is particularly important.3 Between 1998 and 2008, the Russian economy experienced a growth rate of seven percent driven largely by high oil prices.3 Despite the recent decline in petroleum prices, exports of national resources have caused the Russian economy to grow on the whole since the fall of the Soviet Union.4 Amongst other things, Russia has been able to use revenue from petroleum exports to finance large military endeavors. Many of these endeavors have been contradictory to US

Following the collapse of the Soviet Union and President Vladimir Putin’s ascendency in the early 2000s, he and his government have been hell-bent on reclaiming Russia’s old title of a world superpower. In conjunction with his administration, Putin has commandeered Russia’s identity to the narrative of being an energy superpower by using the nation’s most effective weapon: the country’s energy resources. Peter Behr’s article for the Congressional Quarter Global Researcher titled “Energy Nationalism,” seeks to demonstrate and explain why and how Russia—in addition to other countries such as China and Venezuela—became so nationalistic and protective of its energy resources. Furthermore, “Since the oil age began more than a century ago, governments in the developing world—on both the right and left—have promised their people a fair share of the wealth…Instead, ‘black gold’ has spawned corruption, economic hardship, vast class differences and civil war” (Behr 2007). When politically creating a nation’s identity on the world’s stage, leaders incorporate the benefits and effects of human, material, and natural resources. Since these are constantly evolving variables, a country’s identity, particularly relating to natural resources, is constantly evolving as well. Nevertheless, Putin is reminiscing and effectively reenacting Russia’s energy production days in order to shape the narrative of being a geopolitical and energy superpower. However, prior to understanding and examining

&nbsp;First, the laws and political hurdles in Russia (and most countries) take significant time to sort out and bypass. &nbsp;In Russia, it is necessary to have political connections in order to even gain access to the oil markets. &nbsp;These relationships take significant time to build. &nbsp;Also, once a firm established political support, it needed to find a site with enough oil to make it worthwhile to build operations. &nbsp; The testing process to find a well is also a lengthy process. &nbsp;Next, the drilling and pipelines are built and the oil is retrieved, treated, and transported to the market or storage. &nbsp;This process is also very time consuming. &nbsp;As a result of these factors, firms interested in gaining access to these regions often wait many years before they become established producers of oil products. &nbsp;It takes even more years to be profitable. &nbsp;Therefore, by gaining early entry into the Russian oil market, a foreign firm can gain many strong years of prosperity and growth. &nbsp;<p>

This ties in with some recent reports that Kazakhstan has one of the fastest growing economies in the world (Robinson, 2015). Hugely because of the oil reserves found in the country, Kazakhstan has benefited from averaging 8% growth rates since 2000 for their GDP and has given significant rise to the per capita income (International Monetary Fund, 2013, p. 3). These large oil reserves have given many countries great interest in the country and continue to provide money to this region to help ensure their own interests are secure in regards to providing oil for their own

To examine the role of the Middle East and Russia in the energy market and why in the last 5-10 years, the oil, coal and gas market has been deemed insecure.

Russia’s energy security depends largely on the global demand and international energy market price. Thus, Russian energy security is vulnerable to market forces and benefits from economic stability, particularly that of the European countries, with whom Russia conducts the majority of its energy trade. Let us see the history trend of Russia’s energy trade during the financial crisis.

Russia is the largest country in the world. It borders two oceans, spans two continents, and its landscapes range from Arctic tundra to subtropical beaches. Much of that land is undeveloped and uninhabited. Russia’s borders encompass twice the surface area of the United States, but has a third of the population. Natural gas and oil are abundant in Russia because of its sheer size and the variety of climates. West Siberia is Russia’s main oil-producing region and has several large oil fields, one of which has been producing since 1969 (EIA). West Siberia’s population is mainly concentrated into a couple cities, leaving much of the land untouched. This is the prime

The Russian economy is largely founded on the repercussions of the former political and social parties that held power for so many years. Russia’s economy has been one of centralized focus and production for decades. From investment, production, and consumption, the

Inevitably, diminishing oil prices weaken Russia’s GDP and will continue to pull its economy in a downward direction following each drop in price. Moreover, the value of Russia’s ruble has experienced a decrease in value since the fall of 2014 weakening exchange rates (). As of today, one Russian ruble is only worth 0.017 USD. Along with the country’s weak economic growth, Russia’s annexation of Crimea and the outbreak of war in Ukraine have contributed to the devaluation of Russian currency ().

Russia’s legislature approved the forced transfer of certain fields to government-controlled firms. In 2006, Shell was forced to transfer an expansion project to Gazprom. That same year, concern over the possible revocation of the license to the Kovykta gas field and Gazprom’s ability to block construction of a pipeline to China, forced TNK-BP to sell its stake in the field. Gazprom purchased the stake for less than a third of its real value. The Russian government had also been known to both privatize or nationalize firms and rig auctions in order to favor government-controlled corporations.

Russia's new strength is also based on its vast reserves of oil and natural gas, which as the price of crude exceeds $ 120 per barrel, give the country tremendous bargaining power, not only in its relations with countries directly dependent on its supplies as Ukraine, Germany and Hungary, but, in general, by the capacity of influence that give

The oil industry is one of great power that countries are invest in. Russia is one of the leading contenders in producing oil and exports the goods to various countries. With great resources comes great strength. Oil is of the utmost important to every country therefore, Russia has an upper hand in some respects. Moreover, the history behind the oil pipelines and how Russia connects to different countries allows for insight into the power they withhold politically and economically, and on the improvements that need to be made to continue growth in this industry.

The economy of Russia was forecast to grow in 2013 at a lesser pace anticipated at the beginning of the year and its performance will be better in 2014. This is attributed to weak tapering consumer demand and weak investment. In 2014, the Gross Domestic Product rose by 1.4% contrary to the expectations of 3.2%. The economists are pessimistic about the wellbeing of their economy come 2015, forecasting a growth of 2% against the 2.5% for the ministry’s economy. The vast economic parameter of Russia is controlled by oil production.

Kazakhstan has the world's fifteen-largest proved reserves of natural gas with an estimated 2.407 trillion cubic meters, ranking it between China and Malaysia in this respect (CIA World Factbook, 2012). Most of these fields are in the country's western Caspian region. That basin is home to some of the world's best oil and gas reserves. Other Caspian nations such as Russia, Iran and Turkmenistan are all among top ten in the world for proved reserves of natural gas (Ibid). An estimated 80% of Kazakhstan's production is locked in four fields: Karachaganak, Tengiz, Imashevskoye and Kashagan. This paper will outline the natural gas industry is Kazakhstan, providing insight into its history and the state of the industry today.