Business risks the oil
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The head of “RUSAL” Oleg Deripaska believes that in the coming years oil prices will go up. On the contrary, the billionaire does not exclude that the quotes may fall to $ 18 per barrel. And then the fall of the national currency up to 100 rubles per dollar will become a reality. However, Deripaska’s comforting that it’s not as scary as it seems.
“Cannot pray and wait, looking at these quotes, it is better. You need to understand that structural overproduction for a long time, can see the price of oil and 18 dollars is not going to die, and can see the rate in 100 roubles — also will not die. You need to move, knowing that it will be”, — said Oleg Deripaska, speaking at the Krasnoyarsk economic forum.
Previously Executive Director of the Vitol Group BV Jan Tayloralso predicted a long period of low prices, however, range from 40 to 60 dollars per barrel. But the President of BP Robert Dudley optimistically suggested that an excess of oil on the market will be leveled by the end of the year and prices will start to rise.
Despite the fact that the main trouble of the Russian economy Deripaska called the strong dependence on external factors, he expressed doubt that the authorities model of import substitution can be effective. According to the businessman, Russia needs to focus on exports, although not to depart from Europe, but increasingly rely on Asian demand.
“I don’t believe in the substitution as in the mantra. Import substitution is the model of the nineteenth century. You need to go for export, not many resources, but we have them,” said Deripaska.
In addition, it is advised to revitalize the domestic market, with domestic demand — it will help to stabilize the situation and stop the decline of the economy. You also need to build a “distributed model, based on the priority of private property, less susceptible to external factors” and to develop the infrastructure of Siberia, to make the extraction and export of resources is cost effective.
This position is quite understandable for the head of one of the world’s largest aluminium producers, the demand for which, by the way, last year grew by 5.7% and shows an increase in 2016. But can it be a panacea for the Russian economy in General?
I think Deripaska said, first of all, that structural changes in the economy to produce in any case, and not sit idly by and wait for that oil and the ruble will soon grow up and everything is back to normal, says economist, Professor of Ranepa under the RF President Vladislav Ginko. But I would draw attention to two points.
First, the economy itself waits for nothing and adapts. Despite the fact that the oil and gas company produced record volumes of oil and gas revenues still falling because of falling prices. So, in economy there is a need to create new jobs and new businesses. Lower prices for oil and gas is one of the moments that characterize economic change, but not the only one. Other factors also require adjustments. For example, the scientific-technical progress leads to the fact that new professions are appearing and others are disappearing. This is a natural and constant process of changes in the economy.
Secondly, it seems to me, nobody sits and waits. There is no doubt that the economic policy changes: anti-crisis plan is drawn up, introduced initiatives to support small and medium-sized businesses. Another issue is that the debate about how accurately these changes will go on forever.
“SP”: — if Deripaska that a negative oil situation is seriously and permanently?
Such windfall revenues that were previously no longer exists, and it is an indisputable fact. But what they will not do — this is also a discussion point. We now live in a new kind of reality, but remain a major energy power, along with Saudi Arabia or the USA. No one can reliably predict what will happen to energy prices in a month, a year or two. Despite the fact that someone does not believe that oil will rise to $ 100, can’t we, as forecasters, completely discounted this option. Can not pay attention to him, but cannot be ruled out. Global market conditions could change suddenly, often for unexpected reasons.
Although from the point of view of stimulation of economic development is more useful to assume that the return of oil prices to previous levels will not occur. We must live within our means in the context of current realities and to deal with the structural reforms of the economy.
But if you completely dismiss the scenario that not only oil, but other commodities will go up sharply, we may find ourselves in a situation where we have not invested in these industries sufficient funds. This will be doubly frustrating. We will not be able to increase the volume of resource extraction under favourable conditions due to the fact that not invested enough in these areas, but will lose its share, i.e. get less than they should be.
From what we now became interested in the idea that the profits will never be, we must not forget that each country has its own advantages and opportunities. Our country is natural resources. Nothing wrong with that. Not only we trade raw materials. From countries that do not have natural resources, there is no other choice but to engage in other sectors of the economy. We have this alternative, although for the full development of the economy to behave as if it is not.
“SP”: — whether the substitution is not working and you need to focus on exports?
— The President of Russia in his recent speech noted that the criterion of efficiency of development of new industries, including in the framework of import substitution, we need to take the ability of these companies to provide services and trade in foreign markets. What says Oleg Deripaska, the authorities have understood and responded. The substitution can be treated in different ways. But its success will be judged by the fact whether these products are in tough competition to find a buyer in the foreign market.
If the demand will be only within the country but with global competition either on quality or on price, the company can not handle, then it may lose the support of the state. The President announced that in the framework of the import substitution policy, we will not just rejoice in the fact that something is made in Russia. It has also to withstand global competition and to earn on foreign markets. The substitution in this form is not a concept of the nineteenth century, and the modern approach.
By the way, not all agree that we need to make a big emphasis on exports. But for the Russian economy in current conditions of the export revenue that we receive in dollars, euros and other currencies, is very important. We integrated into the global economy, and we have quite an extensive import. This means that we have to make this import. So far, we still have a surplus trade balance, i.e. we sell more than we buy. The challenge is to strengthen this safety cushion in the trade.
The substitution is necessary in reasonable limits. If domestically we can offer a product that will satisfy customers and will cover all their need, according to a number of positions, we can completely replace imports with domestic production. It is clear that the implementation of these tasks is complex and difficult, but some progress is already there.
General Director of the Russian centre of living standard, head of the Department of labour Economics and personnel management REA them. Plekhanov Vyacheslav Bobkov does not exclude that the low oil prices to last long.
— Now in the world of high turbulence, and politics dictates the economy of the rules of the game, not Vice versa. It is very difficult to predict how will this situation develop. But high turbulence, most likely, will not be quickly overcome. Will we manage external pressures on the economy depends on how we will be able to mobilize their domestic resources, and they are huge. Earn internal market, whether to develop import substitution, will we be able to send export flows to the domestic economy, as far as we are able to dynamically readjust and so on. We need a strong restructuring, including in the management of the economy.
So far, this transformation and the reaction is slow. We continue to discuss the financial leverage, the underappreciated role of labour resources and motivation. Falling real incomes, respectively, the demand and standard of living. In many respects our economic policy needs to be changed.
“SP”: — Deripaska said to be oriented at export, not at import substitution…
Is it right that you have to combine the development of industries, both for domestic market and for export. It’s one thing to sell products within the country where the consumer is guaranteed and the other on the world market, where the competition is high. The quality must be on a fundamentally different level. Of course, if we managed to increase exports, this would provide additional income to the economy of the country. This is the right task, but very difficult.
We need to radically change the ratio of exports and imports in several sectors of the economy — and in light industry, and food. We are so dependent on exports that it is difficult to name areas where we would be competitive. Today, we will be forced to saturate their markets with our products. Naturally, we would like to supply products to foreign markets, but it’s a lot to do. Including Oleg Deripaska and other oligarchs, who will have to decide how to share their income with the General population.