[FPSPACE] OT: Russian oil revenue (was Re: Private company plans $100...)

[Robert G Kennedy III]

David Anderman asked:
>Is it actually true that the Russian Federation generates most of its
>revenues from oil sales? I was under the impression that the 13% flat tax
>was generating significant tax revenues.

/The Economist/ thinks so. Much of Russia's oil revenue has been drawn away
from (most of) the oligarchs, back into the bosom of the State, via dirty
tricks not very different from those (Yeltsin-era looting) which separated
it in the first place. I'll have to dig up the issue - May 2005 or so. That
flood of hard cash is propping up the whole system, and will reliably do so
for about another generation. (The big surprise in the report for me is
that Iran is now number 2 in proven reserves.)

Perhaps the flat-tax does constitute most of the state's revenue right now
(I have no idea, but I personally doubt it), however one must also look at
the sensitivity of the overall economy to oil prices, i.e. how highly
leveraged is it based on this single resource?

Aside from the huge profits, the reliability itself of this revenue stream
gives the State another sort of cushion. Even though Siberia is still a
cast-iron b*tch to drill in, this time they are avoiding much of the
apalling waste which characterized the Soviet-era methods. OTOH, like all
extractive economies, this source of wealth is not sustainable and not
well-postured for the far future. Also, the high oil profits have given the
Russian state an excuse to avoid making certain hard structural decisions,
which is no luxury at all in the long run.

--
Robert Kennedy, PE
http://www.ultimax.com