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Oil , int’l macro and geopolitics

Oil , int’l macro and geopolitics. Torbjörn Becker Director, Stockholm Institute of Transition Economics (SITE) @ Stockholm School of Economics www.hhs.se /site torbjorn.becker@hhs.se. Points to discuss. A few notes on supply and demand Global warming , carbon taxes etc ?

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Oil , int’l macro and geopolitics

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  1. Oil, int’lmacro and geopolitics Torbjörn Becker Director, Stockholm Institute of Transition Economics (SITE) @ Stockholm School of Economics www.hhs.se/site torbjorn.becker@hhs.se

  2. Points todiscuss • A fewnotes on supply and demand • Global warming, carbontaxesetc? • ”Macro is back” • Traditionalreserves/productionand demand – whoare the major players on bothsides • ”Winners” and ”loosers” ofshale gas/oil • BRICS and energy • Emergingmarkets overtakingdevelopedcountries in terms ofeconomicsize • Russia

  3. ”Simply” Supply and Demandbut… • Short vs long run • TK focusedon structuralfactorsthatareimportant for long-runpricetrends (climatepolicies?) • ”Short” runfactors still createenormous variation in priceswithuncertainforecasts – linkwithmacro • Partial vs general equilibrium • First-round priceeffects from new supplysources and reduceddemandwillaffecteconomicactivity and alsoincentives for future investment in bothenhancingsupply and reducingdemand • Emerging markets will be veryimportant for howthisevolves, both on supply and demandside

  4. Useful forecasts?

  5. “Fluctuations in economic activity and in the outlook arethe primary determinant of short-term commodity price movements, with some caveats. …. commodity-wide factors have mainly reflectedcommon macroeconomic developments” IMF 2012

  6. Oil supply (2012)

  7. Oil demand (2012)

  8. Growth forecast(2011-2017 USD BNP, IMF)

  9. Oil reserves

  10. Gas reserves

  11. “Winners” and “Loosers”? • Timeperspectivecrucial • Transitionprocessestriggered by oilprice swings arelikelyto be messy in countrieswhereautocraticpoliticalpowerstructuresarebased on extractionrevenues • Howmanyoil nations candevelop by just extractingoil? • CanRussiacatchupwith West just by extraction?

  12. Oil supply vs political freedom Political rights/Civil liberties, 1 is best, 7 worst (Freedom house) 7/7 6/6 ?/? 4/4 5/5 6/6 2/2 4/5 6/5 5/5 1/1 1/1 1/1(?)

  13. WB: “Subsoil wealth of nations” ($/capita)

  14. Total wealth of nations ($/capita)

  15. Putin’s Russia

  16. Oil price drives Russian GDP

  17. Russian exports, all about extraction

  18. Russian government budget, half is oil and gas

  19. Medvedev’s “awakeing” • The crisismade the dependence on oil and gas and need for reforms obvious • ”Russia forward!” in Sept 2009 • Agenda • Innovations (Skolkovo=Silicon Valley) • Energy efficiency • International financial center • Fight corruption, Law and order • E-government • Putin and higheroilpriceshas changedthe sense of urgency for reforms

  20. Thanks! Torbjörn Becker Stockholm Institute of Transition Economics (SITE)/ ÖstekonomiskainstitutetvidHandelshögskolani Stockholm www.hhs.se/site torbjorn.becker@hhs.se

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