Add to favorite
Subscribe to our Newsletters Subscribe to our Newsletters Get Daily Updates RSS

Media Buzz: Possible US Oil Sale as Penalty for Russia
March 28, 2014 16:08

Photo Credit:
It was Philip Verleger, founder and president of PK Verleger, who first who brought up the oil curse option in early March. According to the economist who used to work in the White House and the US Treasury in the 1970s, the US must tap into its strategic petroleum reserve to cause a slide in oil prices that would be a real blow to Russia.
America could push down global oil prices by as much as $12 a barrel by selling 500,000 barrels a day from its strategic reserve, he said, costing Russia about $40 billion in lost income from oil and gas sales, equivalent to 2 percent of its economy.
His opinion was echoed by George Soros, who dismissed the current US sanctions on Russian oligarchs as ineffective. By diverting their funds into foreign jurisdictions, these wealthy individuals only undermined Russia’s economy, he added. What’s more important, he says, it that a sale of the emergency stockpile would not damage the US interests because of the boom in shale gas and oil.
Many experts, however, have rebuffed the calls to attempt to lower the prices by selling emergency reserves. “If you use oil and aim it at Russia, you’ll hit Texas,” Bloomberg quotes Kevin Book, managing director of ClearView Energy Partners LLC, a Washington-based consultant, as saying.
Many of the US oil producers don’t have too big a margin to endure its drop, the expert went on to say.
According to Stanford’s Ronald Hilton, “one of the most effective ways in which Reagan’s economic policies weakened the Soviet Union was by helping bring about a drastic fall in the price of oil in the 1980s, thereby denying the Soviet Union large inflows of hard currency".
“Because of the high oil prices of the 1970s the Soviet leadership avoided serious economic reforms, such as those that saved Deng Xiaoping’s China. Instead, it relied on oil revenues as a means of keeping its decrepit economy going. By the early 1980s the Soviet Union was becoming a hollow shell, with an unreformed and increasingly backward industrial base producing outmoded pre-computer armaments. Thus it was highly vulnerable to the pressures that the Reagan administration was planning,” he adds.
Anyway, most analysts seem to agree that any effect a sale of strategic petroleum reserves could have would be temporary. The impact, however, could be doubled if the US finds a way to pressurize Saudi Arabia into expanding their production. Interestingly, US President Barack Obama is meeting with the Saudi King today, on March 28.

“If the U.S. coordinated with the Saudis to ensure that they did not cut back production – indeed, they could even step up production from 9.7 million bpd – the greater supplies could slash prices almost immediately,” says Nicholas Cunningham of 

Author: Mikhail Vesely

Tags: Russian economy Ukraine crisis Crimea Russian oil and gas industry  

Next Previous

You might also find interesting:

Mortgage Rates In Russia Fell to the Historic Low Level Football: 3 Candidates for Spartak Moscow "Harry Potter and the Deathly Hallows" is in Moscow Banks' Bailout Blueprints To Battle Big Trouble Aeroflot will Sign a Contract with Rostekh on the Supply of MS-21

Comment on our site

RSS   twitter   facebook   submit

Bookmark and Share

search on the map
Mercedes-Benz Fashion Week Russia  taxes  travel to Russia  Russian Premier League  Kemerovo Region  Dozhd TV channel  Festivals in Moscow  September Electric  Space Exploration  Oleg Kononenko  Exhibitions in Moscow  bus tickets Russia FIFA  Russian designers shop online  Russian Cinema  Antony Pogorelsky  LGBT in Russia  Russian regions  Russian tourism  Moscow  Treasures  Entertainment Park  Russian oil and gas industry   New Year  FIFA Russia 2018  Moscow Architecture  Bubonitsy  Russian circus  St. Petersburg  Where to go in Russia  oil prices  All-World Youth and Students Festival  Sochi  system of governmental scientific attestation  Tambov  Kizhi  Russian hotels  human rights in Russia  Music Festivals in Russia  Russian natural parks  Russian musicians  Victory Day Parade  Leo Tolstoy  Vladimir Vysotsky  Football  Savva Morozov  Russian business  MYSTERIA Festival  IT market in Russia  Laroom  Winzavod 

Travel Blogs
Top Traveling Sites