Russian Oil Offers Slick Alternative
December 11, 2002
As the U.S. looks for new and reliable energy supplies, Russia is finding new and reliable sources of income. The country sells five million barrels of crude and oil products per day on the international market; second only to Saudi Arabia.
In the last two years alone, Russian oil production rose by more than a million barrels per day and four of its biggest oil companies last week announced plans to build a $1.5 billion Arctic oil port that could supply as much as 10% of American crude in the future.
- While Russia produces 7.1 million barrels per day, it only exports 5 million barrels. In comparison, the Saudis export 7.4 million barrels, about equal to their total production.
- Several months ago, Vice President Dick Cheney voiced support for using Russian oil to fill U.S. strategic oil reserves to the proposed capacity of 700 million barrels.
- A U.S.-Russia energy alliance, would be great for consumers, because by streaming between five and nine million barrels of Russian oil per day, the international price of oil would quickly fall below the OPEC minimum target of $25.
- American investment can help turn Russia's oil sector into a highly competitive one. Russia desperately needs around $50 billion between now and 2010 for expansion.
No tears will be shed in Washington or Moscow over OPEC's demise. The U.S. doesn't appreciate the cartel's spotty record in providing steady supply at a stable price. By helping Russia's private energy companies become a global force, the U.S. can kick its Middle Eastern oil habit, and maybe bring down OPEC in the process.
Source: Borut Grgic (School of International Service), "From Russia With Love," The Wall Street Journal, December 5, 2002.
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