I’d like to keep an eye on how Russian oil and oil product exports behave going forward.  For some crazy reason I have a feeling they will be headed down.  Well, maybe the reason is not so crazy.  It’s based on the fact of monopoly pricing.  Oil and products in Russia are pretty well controlled at the top these days, so the country  operates very much like a monopoly.  Like any monopoly, its profits are maximized when it produces less than it is able to produce because reduced exports will increase the price by more than the amount of lower production.  I don’t expect any big dramatic announcements of reduced exports from Moscow, but I suspect that when we wake up in a year we’ll find Russia has provided less oil and oil products to their export customers than in the past.

Incidentally, Russia has every right to export whatever amount of oil they so desire.  It is, after all, their oil.   So for those hawks who want to up the ante in Georgia, I would remind them that Russia has been acting as a pretty darn good neighbor, especially to the Europeans who directly depend on Russian energy exports.  Russia could easily be getting more money for their energy products by supplying less of them.  That would yield them both more gross revenues and more oil staying on Russian soil for future use.  The fact that they have not gone to a monopoly pricing model more aggressively is a blessing for the West that is hardly ever counted.  

Here is a report on gas oil and gasoline exports falling during August.  We’ll see if the trend I expect develops.

Russian gas oil, gasoline exports fall in Aug

Mon Sep 1, 2008 7:54am EDT

MOSCOW, Sept 1 (Reuters) - Russian exports of gas oil and
gasoline fell in August due to higher customs duties and
increased demand for the fuels on the domestic market, data
provided by the Energy Ministry showed.

 Russian oil companies exported 86,219 tonnes per day of gas
oil in the first 27 days of August, down by 5.7 percent from
91,390 tonnes per day in the first 30 days of July.

 Exports of gasoline, which usually amount to just around 10
percent of total sales of the fuel, fell by 14.7 percent to
9,167 tonnes per day from 10,740 tonnes per day in July.

 To see a table on Russian refined products sales in August
click on [ID:nL30484022].

 Traders said that the main reason behind lower exports of
gas oil and gasoline was the increase in export duties, which
rose by 23.5 percent to a record of $346.4 per tonne of light
oil products from August.

 The increase of the duty led domestic prices for gas oil to
rise to 5,000 roubles ($202.8) per tonne, or 24 percent, higher
than the export price, adjusted for transportation costs, in the
beginning of the month.

 Higher seasonal demand, mainly from agriculture and railway
companies, also supported domestic prices for gasoil and
gasoline.

 Exports of gasoline were also hit by maintenance held at
reforming units -- in charge of the fuel's production -- at some
of the refineries, such as Surgut's (SNGS.MM: Quote, Profile, Research, Stock Buzz) Kirishi plant and
Rosneft’s (ROSN.MM: Quote, Profile, Research, Stock Buzz) Kuibyshev refinery.

 The Energy Ministry data showed that exports of fuel oil
rose by 0.9 percent to 123,259 tonnes per day in the first 27
days of August compared with 122,110 tonnes per day in the first
30 days of July.

 For Russian energy news, double click on [RU

Tags: peak oil energy investments

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