Tuesday, August 25, 2015

More on oil

In April of 2014 TU's own Prof. Woroby gave a talk about what's going on in the Ukraine. The short version is that Russia's fading fortunes were buoyed simultaneously by the aggressive leadership of Vladimir Putin and by high oil prices. Most Russians seemed to think that the former is what mattered, but in fact the latter has played a huge part. Actually, it looks like we'll soon find out since oil prices have dropped and don't appear to be going anywhere. How good does it seem to the Russian people (to the extent that he has a popular mandate) to retain this guy? A recent article in the Financial Times (behind pay wall) holds out hope that the power-hungry autocrats now in charge will one day fall and better leaders will rise. The low price of oil certainly makes that more likely!

Cheap oil threatening Russia, the Saudis, Venezuela, and even Nigeria seems like a good thing. However, it also poses a threat to governments like the fledgling democracy of Iraq which, for all its warts, is hopefully better than what it was. It's not helping provide stability in Lebanon, either, where government paralysis has reached epidemic proportions. What will it mean for Iran, which is trying to come out from years of economic sanctions and again sell its oil to the larger world? Change is in the air....

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