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Monday, October 24, 2016

Save you oil the Russian budget

“Black gold” continues to rise. Experts predict a further rise in prices, resulting in crude oil gain $55-60. Our country is good — this scenario will allow the Dec to achieve the budgeted average annual level of $50. But save you oil the Treasury as a whole — is not clear. In the first quarter of petrodollars amounted to 34% of total revenues. In 2015, the figure was 48% and in 2014 it reached 66-67%.

photo: Gennady Cherkasov

The cost of “black gold” continue to push up the U.S. dollar. Reserves and production in the United States are falling. The first indicator fell last week by 4.3 million barrels to 537,1 million, whereas previously the fall was predicted by no more than 2.5 million So the oil reserves in the United States have not fallen since the beginning of April. The number of drilling rigs in the U.S. for the week decreased by 0.5%, as a result, oil production in the country decreased by 24 thousand barrels per day, which also predicts the dawn of the “shale revolution”. Of course, 24 thousand “barrels” can not be compared with 500 thousand barrels of production growth, which threatens Saudi Arabia. And moreover, it cannot be compared with 1 million barrels of increased production, which has already made Iran.

Especially against the background of forecasts about the growth of interest to motor fuel in the United States this year. Unlike Russia, where in conditions of cheap oil the cost of gasoline growing in the U.S. the low cost of fuel has enabled the population to return from trips on public transport to personal cars. According to some forecasts, the demand for gasoline in the United States for the year will be a record for the last 9 years.

When you own drop in production Americans will have to print more and more inventory and increase the purchase of energy resources outside the country. Which again will push prices up. So in the second half of the year we can see oil prices at $55-60.

Russian officials are rejoicing. This level of prices will allow them to say: planning the 2016 budget, we were right — the average annual cost of “black gold” will be required $50. The government then, quite possibly, will keep the budget deficit at 3%, as promised when it was planned initially.

But to count on such a favorable outcome is premature. As stated by the Minister of Finance Anton Siluanov, the share of oil revenues in the budget of Russia in 2014 to the end of the first quarter of 2016 dropped from 66-67% to 34%. Income from other business especially not grow. This is evidenced by the fact that for the first four months of this year, Russia’s budget deficit was estimated at 4-5% of GDP, and only in April was 8.6% of GDP.

So will the oil fill holes? The Chairman of the Center for strategic research Alexei Kudrin said that even under the most successful scenario in the oil market, Russia’s budget deficit will be below 5% of GDP (5 trillion rubles).

Dmitry Medvedev not so long ago boasted that the proceeds from the sale of oil and gas in the budget is already less than 50%. Siluanov said more specific numbers. However, the fact that the Treasury deficit is growing every month, demonstrates that hydrocarbon replacement while our officials had not yet been invented.

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