Re: [A-List] article and notes

["Anne Williamson" <annewilliamson@xxxxxxx>]

"Economics in One Lesson" by Henry Hazlitt.  I suspect my recommendation
will give "our" Henry fits :-) - Anne

----- Original Message -----
From: <sherrynstan@xxxxxxx>
To: <a-list@xxxxxxxxxxxxxxxxxxx>
Sent: Monday, December 24, 2001 7:36 AM
Subject: [A-List] article and notes


> Russia Wins the War
>
> By David Ignatius
>
> Sunday, December 23, 2001; Page B07
>
> As the dust begins to settle in Afghanistan, it's increasingly clear that
the big winner in terms of post-Sept. 11 energy politics is Russia, which
now rivals Saudi Arabia as the world's dominant energy producer.
>
> Since oil and politics tend to flow in the same direction, the rise of
Russia's oil industry will have major strategic impact. It will transform
global business, too, as Russian oil companies such as Lukoil and Yukos join
the likes of Exxon-Mobil and BP among the "super-majors."
>
> The Afghanistan war will give Russia control over the oil flowing out of
Central Asia, according to energy experts. That's the practical price
Russian President Vladimir Putin can exact for supporting George W. Bush
after Sept. 11. The output from the two big Central Asian producers,
Azerbaijan and Kakazkhstan, could total roughly 3 million barrels per day by
2010.
>
> Russian companies may also be the dominant players in Iraq, regardless of
who's in power there. That would add another 6 million barrels per day of
potential production under Moscow's loose control.
>
> Then add Russia's own production, which now totals more than 7 million
barrels per day, and it's obvious that Moscow is on its way to becoming the
next Houston -- the global capital of energy. Russia would have a degree of
control over about 16 million barrels per day, roughly double the current
production of Saudi Arabia. And those totals don't include natural gas,
where Russia is already the dominant producer, by far.
>
> Russia's emerging dominance of the energy industry is a theme of a recent
study by the Petroleum Finance Co., a Washington consulting firm. Their
analysts note that when you combine Russia's proven oil and gas reserves, it
is already the world's leading energy nation, with about 15 percent more
proven reserves than Saudi Arabia.
>
> "The U.S. need for Russian cooperation means Moscow will gain most in the
new strategic environment," argues a Petroleum Finance analysis of "winners"
and "losers" in the post-Sept. 11 world. Russia's political hegemony in
Central Asia will be strengthened, according to the study, as will its
control over regional pipelines and other export routes.
>
> The big change will come as Russian oil companies change from sluggish
state-owned giants (and their toxic successors, the privatized companies
whose shares were looted by Russian "oligarchs") into dynamic modern
companies.
>
> These Russian companies today are chronically undervalued because of their
robber-baron roots. Yukos, for example, has reserves roughly equal to those
of TotalFinaElf. Yet its market capitalization is less than one-tenth that
of the European company.
>
> "The Russians have realized you can make more money by real capitalism
than by stealing," notes J. Robinson West, chairman of Petroleum Finance.
Already, Lukoil is planning to list its shares on the New York Stock
Exchange -- which will force the company to meet tough U.S. accounting
standards.
>
> The Russian oil giants are beginning to invest aggressively outside their
home market, in areas where the Russians have easy political access. Lukoil,
for example, is investing heavily in Iraq's West Qurna field, which is
expected to produce nearly 700,000 barrels per day. The company is also
exploring for oil in Algeria, Sudan and Libya.
>
> "The Russian companies are going to play a major role," agrees Walid
Khadduri, the editor of Middle East Economic Survey, an authoritative
newsletter on the industry. A big question, he says, is whether Russia will
be open to foreign investment in its own energy reserves.
>
> Another energy winner in the post-Sept. 11 world is Iran, according to
both Petroleum Finance and Khadduri. Like the Russians, the Iranians were
important -- if invisible -- allies in America's war in Afghanistan. And
they're likely to be rewarded. "Washington has been forced to recognize
Iran's strategic interests in the Middle East and Central Asia," explains
the Petroleum Finance study, "but Russia's ascendance in Central Asia will
limit Iran's political and economic gains."
>
> Iran's biggest problem in capitalizing on its new status is its political
dual personality. It has a moderate president and a young population so
restless it's holding pro-American riots after soccer games. But Iran's
mullahs and secret police are clinging to power, and they may hold the
nation's oil industry hostage.
>
> Saudi Arabia's immense oil reserves will make it a key player in the oil
business, regardless of what happens with Russia and Iran. That's why some
recent calls by American politicians to reduce dependence on Saudi oil miss
the point. Americans can buy less Saudi oil if they want, but in a global
marketplace that oil will simply be bought by someone else.
>
> Oil is a proxy for power. And the rise of Russia's oil industry is a
symbol of Putin's success. In just a few years, Russia has moved from being
an economic basket case to Bush's key ally. The economic rewards for
Russia's new status are beginning to trickle in.
> %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
>
> Could the list manager please switch me from digests to individual posts.
The digests are too big to pull down easily on my ancient equipment, and
they are coming in with a lot of html(?) trash breaking up the text.
>
> Also, I have to admit that Henry's and Anne's posts have lost me, not
being an economist... Is there a user friendly glossary around for twits
like me to help us figure this stuff out, and a kind of Econ 101 that can
put this together?  I have more than just selfish reasons for this.  A
number of us here in NC want to put together a one-day workshop, aimed at
working class folks with, say, a 7th grade reading level, called Economic
Literacy, that *begins* to demystify this stuff.  That means we have to
become literate ourselves.
>
> Thanks,
>
> Stan
>
>
>