Thread: What do we earn from selling oil?

Originally Posted by Romik

Well, I really don't know, there are a lot of things I don't understand. Now they involve BP to rig the Arctic that has just smeared the US shores.

Well, perhaps the BP presented them with a better откат rate of the successful vs. the unsuccessful sea-floor drilling projects. But, let's leave the BP out of scope for now. What is the bottom line in our discussion? So far you were unable to provide an example what else Russia could export to diversify its income, in addition to the energy carriers. So, let's assume for now that is the only export available in the near future. So, what would you suggest doing with the oil money?

What is the bottom line in our discussion?

What I have said is that contemplating of developing some kinds of infrastructure from oil money seems to me is of no use in contemporary conditions as often it's against the market.

So far you were unable to provide an example what else Russia could export to diversify its income, in addition to the energy carriers.

What the point of any examples? I think the less would be the dependence of the economy of the fossil fuels the more any examples you would see. That example of petrol is not the ultimate kind of product I think Russia is able to produce, I believe Russia can do things of far higher level and to be quite more competitive, not just to sell oil and gas, there is history that can show something, and now there are still examples like KAMAZ that time by time has been winning the Dakar.

So, let's assume for now that is the only export available in the near future. So, what would you suggest doing with the oil money?

It's not interesting to me to ponder where would be better to shove that oil money.

Originally Posted by Romik

What the point of any examples?

You see, earlier you mentioned that you think Russia should stop exporting oil and start exporting something else like "released products". So, when I asked for an example, my point was that there's nothing else Russia could export at this point so that it would have any kind of strategic implications. (Selling 100 Dakkar-winning Kamazes a year will not make any strategic difference for Russia as it imports much more volume than that.) However, if you will be able to bring any real example of what "released products" Russia could export at this time (other than its natural resources), I will shut up and agree with you. Sounds like a point?

Originally Posted by Romik

What I have said is that contemplating of developing some kinds of infrastructure from oil money seems to me is of no use in contemporary conditions as often it's against the market.

Yes, I got that. Perhaps, there's no perfect solution at all. But things are relative, and some solutions are better than the others. So, what do you think would be better: (i) stop selling oil anything and get no money, (ii) let the oil money be buried in the US banks (in some US government bonds), (iii) spend it inside Russia, or (iv) spend it outside Russia? What's your call on that?

Of course there are other things that Russia can export. Some are very obvious (below) I am sure there are plenty more

Expertise in various areas if IT/Computing.
Science and niche areas of Engineering and the defense industry.
Agricultural products, timber
Mining products
Expanding on the Transiberian railway, Russia could make itself a transport hub between the Far East and Europe. This would be a massive industry that would benefit Russia a lot. It's well known that it's better and cheaper to transport overland on that route, than by ship - but this cannot start happening until the transiberian expands its capacity. This would be a worthy project to invest some oil money in, I think!

I gather the Russian leadership is well aware that it needs to diversify industry and that it is trying to make it happen, although some here have pointed out that the investment in the IT industry etc might be affected by nepotism and corruption; like in the case of the new "IT city" in Moscow.

Originally Posted by Crocodile

You see, earlier you mentioned that you think Russia should stop exporting oil and start exporting something else like "released products". So, when I asked for an example, my point was that there's nothing else Russia could export at this point so that it would have any kind of strategic implications.

I'll try to explain simpler. It's not actual to refer everything to "at this point", "at this time". Of course, it's impossible right now to stop exporting oil and immediately to begin to export a lot of high-tech products. Imagine it like a graph, not as some sticked point. Now, for example, you can't produce a product but when there is a change of conditions to one degree you could do it, when there is another change you could produce another product and that cause others products and so on. And that refinement of crude resources is one step that itself can cause other things. Once there is a bit decrease of selling oil you'll see producing a number of released products, another bit - another number and so forth.

Originally Posted by Crocodile

However, if you will be able to bring any real example of what "released products" Russia could export at this time (other than its natural resources), I will shut up and agree with you. Sounds like a point?

No, it's doesn't sound like a point to what I've explained

Originally Posted by Crocodile

So, what do you think would be better: (i) stop selling oil anything and get no money, (ii) let the oil money be buried in the US banks (in some US government bonds), (iii) spend it inside Russia, or (iv) spend it outside Russia? What's your call on that?

It's difficult to comment that because you missing a lot of points.

Originally Posted by Romik

It's not actual to refer everything to "at this point", "at this time".

Let me be more specific. So, what do you propose to sell right now? If that is not oil, than what? You mentioined earlier that "everything is more expensive" than in the other countires. My main question was: what do you think of doing with the oil money? Right now it is just 'saved', but I proposed to invest it into the infrastructure. So, what's your call on that? If I'm missing "a lot of points" please mention at least three. Sounds fair?

If I'm missing "a lot of points" please mention at least three. Sounds fair?

First, I do not suggest to completely stop to sell oil in one moment.
Second, "everything is more expensive" at this time, once withdrawn a part of that money, "everything" will be somewhat cheaper.
Third, that what is just 'saved' is a bit, the budget has been deficit from the time the crisis started, mostly the money just eaten away on things many of which Russia could produce itself and spent on things that make "everything is more expensive".

Let me be more specific. So, what do you propose to sell right now? If that is not oil, than what?

Right now I'd propose to reduce selling oil by 20%, to lessen the government costs with the exception of public-sector ones like of schools, hospitals, pensions.

Originally Posted by Romik

First, I do not suggest to completely stop to sell oil in one moment.
Second, "everything is more expensive" at this time, once withdrawn a part of that money, "everything" will be somewhat cheaper.
Third, that what is just 'saved' is a bit, the budget has been deficit from the time the crisis started, mostly the money just eaten away on things many of which Russia could produce itself and spent on things that make "everything is more expensive".

To be honest, I didn't get the second and the third point, but I guess it's time for me to just let it go.

Originally Posted by Romik

Right now I'd propose to reduce selling oil by 20%, to lessen the government costs with the exception of public-sector ones like of schools, hospitals, pensions.

Do you know what would happen with the world oil prices if Russia would officially announce it's cutting the oil sales by 20%???? The prices will jump so much that Russia would make more money will the remaining 80% than it previously did with the 100%. The OPEC would have a very difficult dilemma: should it increase the sales of its oil or keep it the same? The cost of transportation would hike and consequently the prices of all goods fueling another economical world mini-crisis. Russia would feel that too. I'm not sure you really thought your suggestion through. Also, I'm not sure what does it practically mean "lessen the government cost". Does it mean the budget cut? If yes, you can't usually tell the government they could be 20% more efficient just like that and cut their budget, so it's the schools, the hospitals and the pension beneficiaries which would feel that cut, not the government officials who might even get the increase and not ambitious and expensive government project which are meant to launder money. But, again, I feel like this conversation is unproductive and is going nowhere, so I would just let it go.