It would be a mistake for countries like Russia to assume that oil prices will rise again. The recent drop in the cost of a barrel of oil is indicative of an unprecedented structural change in the energy sector – one that will have significant political implications for petroleum-producing countries.
MOSCOW – It is difficult to overstate the importance of the oil industry to the Russian economy. Globally, Russia is competitive in defense products, space launches, nuclear power, mineral resources, and information technology. But none of these industries compares to oil and gas exports. To the average Russian, the country’s economy seems to be structured around exchanging barrels of oil for cars and smartphones. The trouble, of course, is that as oil prices have plunged, those barrels buy ever fewer imports.
MOSCOW – It is difficult to overstate the importance of the oil industry to the Russian economy. Globally, Russia is competitive in defense products, space launches, nuclear power, mineral resources, and information technology. But none of these industries compares to oil and gas exports. To the average Russian, the country’s economy seems to be structured around exchanging barrels of oil for cars and smartphones. The trouble, of course, is that as oil prices have plunged, those barrels buy ever fewer imports.