The Russian Oil Economy

The Russian Oil Economy

Jennifer I. Considine and William A. Kerr

In this unique work, Jennifer Considine and William Kerr contend that while OPEC currently dominates the international oil market, Russia will be a key player in the future international energy market. Indeed, Russia’s petroleum resources rival those of Saudi Arabia. More than almost any other industry, future performance is often determined by the influence of decisions made in the past. This book provides a detailed history of the development of the Russian oil economy in order to build up a comprehensive and discerning picture of its future role and significance in the global energy market of the 21st century.

Chapter 8: Russian Oil in the 21st Century

Jennifer I. Considine and William A. Kerr

Subjects: economics and finance, energy economics


299 supply with demand along thousands, or hundreds of thousands, of supply chains. Further, as we have seen, there was virtually no monitoring of quality or resources put into enforcement (except periodic use of threats to an individual’s livelihood and draconian retribution For failure, neither of which had any sustained influence on improving the system). The transaction costs associated with the centrally planned economy eventually constrained the Soviet Union’s development to a sufficient degree that it had become stagnant by the time Gorbachev assumed the reigns of power. In a similar way, high transaction costs can be seen as limiting the ability of economies to develop (Hobbs and Kerr, 1999). No amo*mtof tinkering with the command system could have shaken it out of its malaise no matter what the ‘good’ intentions of the Gorbachev reforms. There was no way out of the allocation problems identified by von Mises (1981) at the dawn of the experiment with command economies. The Russian oil economy did find, develop and deliver large quantities of oil and oil-based products during the 70-year experiment in command economics. It represents a major accomplishment and, as laid out in Chapter 1, it has lee a legacy of impressive reserves that are available for both exploitation and future development. The transition decade that started with Yeltsin’s assumption of power had only limited impact on the sector’s ongoing stagnation. In one view, the Yeltsin years represent a wasted decade of foregone opportunities that fiittered away the chance to modernize...

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