Russia Must Drive World Oil Prices Above $150 to $200 /Barrel

“For Putin to have serious room for manoeuvre, he needs to have oil at $150 or $200 per barrel. What we have now is not enough,” says Vladimir Milov, former deputy energy minister and these days an opposition leader.

...Mikhail Dmitriev, head of the Center for Strategic Research, a government-connected think-tank, [adds] that much depends on oil prices. “At prices below $80 per barrel, this system would receive a blow from which it could not survive.” _FinancialTimes

The only thing that makes such statements true is Vladimir Putin's ambition to build Russia into a USSR-sized world super-power. He would require massive injections of capital into Russia's military and technological infrastructures -- and even then, he would come up short. But he has to try.

As noted here previously, Putin's Russia is willing to do almost anything in order for the regime to survive -- including helping Iran to acquire nuclear weapons, and pushing the middle east into all out war.

Putin's hold on power is not absolute. It rests upon several factors:

So what secures Putin’s political power, and how strong is it actually? Briefly, the social contract which Putin has with Russia stands on two pillars: material well-being and stability. More specifically, the following factors have helped the KGB and Putin come to power and hold it.

Disillusionment with democracy and the free market as Russians saw it in the 1990s.
Fear of lawlessness and striving for law and order.
The old habits of living in a deterministic society, particularly on the part of the older generation.
The high price of oil and natural resources, which allows for a comparatively decent standard of living without unleashing the forces of creativity and free enterprise.
The social systems and infrastructures, though shabby and deteriorating, inherited from Communism: cheap medicine, education, apartments, etc., which allowed the government to save on those expenses for some period of time.
Post Communism credit–a substantial increase in production and the standard of living in comparison with the utmost inefficient central planning economy.

One can see that most of these factors are of a temporary nature: people’s memories are fading, the older generation is dying off, and the price of natural resources can fall at any moment, Any of these developments will weaken or undermine Putin’s authority or force him to drastic reforms, which would dramatically decrease his and the FSB’s power–or even oust them.
There are many signs that the Putin regime has never been very strong. It failed to create in Russia a modern competitive economy; it has mixed results at best in its attempt to impose control over the former Soviet republics; and it is losing continuously the most creative and entrepreneurial segments of the population to the West.

There are also signs that indicate that Russia’s ruling elite is not so confident in the strength and longevity of its position. Russia’s rulers try to extort as much money as they can and put it in foreign banks, keep their families abroad, establish foreign residence and even citizenship, and try to maintain good personal relations with influential Western friends. All that looks like the right escape route. _Yuri Yarim-Agaev Frontpagemag

World oil demand has risen fairly steadily over the past 25 years, but if one breaks the demand down into two components: advanced world demand and emerging world demand, it is clear that all of the increase in demand is coming from the emerging world. How much longer -- in the light of economic difficulties in Europe, Obama's US, and China -- will this meteoric rise in third world demand continue?

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Crude oil and gas are both being discovered in significant quantities from China to Africa to the North Sea to the Gulf of Mexico. North American tight gas and oil production continues to rise, and the tight gas & oil contagion is spreading to South America, China, Europe, and the Levant. All of this at the same time that the advanced world -- Europe and the Anglosphere -- are reducing per capita demand for oil & gas.

In addition, new technologies are making conversion of gas, coal, bitumens, kerogens, and biomass to liquid fuels and chemicals, more efficient and economical.

Putin cannot stop these developments. He can only hope that after the world settles down from all the mayhem he has stimulated, there are still Russia and Russians remaining. There is no guarantee of that, regardless of what Putin does.