reply to post by Grock
The big dilemma: To balance its federal budget, Russia must get a minimum of $70 per barrel for its crude oil. But at $32 and change, it's getting less than HALF that amount. The entire country is losing money hand over fist.
$70/ barrel is the same figure they use here in Alaska as the price we need to balance the state's budget this year.
There is no reason to believe Russia or Alaska will get that however.
The economy is going to get worse not better and oil prices will more than likely go down. People will be laid off, drive less, take fewer vacations and trips, and stay at home more. So there will be an oil glut, excess supply. Industry will shut down and require less oil. My pessimistic side says oil will get back down to the teens.
China industry is shutting down, workers are being told to go home, go back to the countryside they came from. The workers are very unhappy because they were promised work in the cities. China fears a worker's revolt.
Russia has always been dependant of oil revinue. They were doing just fine on $140 oil. They were even starting to do their sabor rattling again. Now it's back to cheap oil and austerity. Nothing like Russian austerity in the cold dark winter out on the snowy plains! At least they have a lot of practice, they had to survive for decades on $15 oil.
