Cheap fill-ups? Thank Russia
WASHINGTON — When you drive up to the gas pump and pay under $1.20 a gallon, you should remember to say, "Thank you, Vladimir." That's because Russian policy, along with the economic turndown, is helping to keep oil prices at a two-year low.
Russia has so far refused to make more than token concessions to Saudi Arabia's plea for export cutbacks to keep prices from spiraling downward. The importance, economic and political, of the move by the world's No. 2 oil exporter to increase its share of the market at the expense of Middle East suppliers can hardly be overestimated.
World petroleum prices under $20 a barrel and declining can have the effect of putting $150 billion or more into the American economy, most of it into the pocket of the consumer. At that rate, Russia may be doing more to provide antirecession stimulus than the US Congress.
Russia's largely privatized oil industry has its own reasons for turning up this spigot, but President Vladimir Putin has been quick to reap political dividends. He has presented Russia's oil policy as an act of solidarity with the antiterrorist coalition, saying that Russia can well serve the West as an alternate source of energy to the unstable Middle East. He seems unconcerned that a price war may, in fact, contribute to destabilizing shaky emirates in the Persian Gulf region. When oil prices fell to $10 a barrel three years ago, Saudi Arabia had to borrow money for the first time in its history to cover its welfare-state budget.
Saudi Arabia faces more trouble if Russia is not induced to join in cutting exports.
Encouraged by President Putin, Russia's biggest oil companies this week postponed a decision on whether to reduce oil exports next year. This threatens to defeat the plan of the OPEC countries to bolster declining prices.
Stanford University scholar Michael McFaul notes that Saudi Arabia is not very popular in this country now. He says he is constantly asked in talk shows, "Why doesn't the United States import more oil from Russia?" If that happens, it could well change the dynamics of the Russian-US relationship, giving Putin some new leverage in his chummy encounters with President Bush.
It remains to be seen whether trading one energy dependency for another would be an improvement for this country. But, for the moment, Americans can enjoy the lower prices that Russia has helped bring about.
Daniel Schorr is a senior news analyst at NPR.