The Russian Oil Economy
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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.
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Chapter 8: Russian Oil in the 21st Century

Jennifer I. Considine and William A. Kerr

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8. Russian Oil in the 2 lstCentury The Russian oil economy is a microcosm of the Russian economy. Just as the petroleum sectors of modem market economies must be analysed using conventional economic tools based on market incentives, and responses to them constrained by the regulatory environment within which they operate, the technology available and the resource base, the Russian industry must be analysed within the context of incentives and constraints. When economists analyse the future prospects for oil in modem market economies they tend to dwell on topics such as reserves, regulations and incentives. This is because the markets within which they operate function eEciently; that is, transactions costs are low, and as a result economic actors respond in predictable ways. While the predictions of economists analysing marketbased systems are not always correct, the reasons for their failings most often lie either in unanticipated events or the rudimentary nature of economics as a developing social science. When forecasts are made regarding the oil economies of developing countries, in contrast, less emphasis is placed on reserves, regulations and incentives, and, rather, it is politics and the functioning of supply chains that come to the forefront of analysts’ minds. This is because knowing that reserves exist does not mean they can be exploited successfully; understanding regulations does not mean that they are applied, and while individuals will respond to incentives, they may not be sufficiently transparent to allow predictions to be made. Often, those hired to make predictions are specialists in...

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