Thank Russia For Low Gas Prices
In the politics of oil, Russia is the new superpower, reports CBS News Correspondent Anthony Mason.
"You cannot doubt the effect that Russia has had on the world oil scene," said oil analyst Phil Flynn of Alaron.
Earlier this month, Russia said it would cut its booming exports of oil by some five percent from next year, caving in to pressure from oil cartel OPEC to help support world prices of crude.
Key OPEC nations Saudi Arabia and Kuwait welcomed the move by Russia, the world's number two exporter and a leading rival for market share outside OPEC, to cut exports by 150,000 barrels per day from January 1 out of current shipments of 3.0 million.
Still, the plummeting prices at your gas pump, for instance, are a direct result of Russia's defiance of OPEC. For Russian president Vladimir Putin, it's part of a bold political gambit, and the opening was September 11.
"We have to remember that after September 11 that it was Vladimir Putin who said, 'Hey, if we lose Mideast oil, you'll have a reliable partner from Russia,'" said Flynn. "This has got to shake OPEC from the core."
OPEC, fighting to stem a decline in world oil prices on the back of a global economic slowdown made worse by the shock waves from the September 11 attacks on the United States, had told non-OPEC producers they must help it support the market.
The Russians have not only been cozying up to the U.S., they've been trying to elbow their way in between the U.S. and the Saudis.
"They're using both elbows and they're shoving a lot," said Roget Diwan of the Petroleum Finance Corp. And if Russia's bid for oil influence, succeeds, "It changes really dramatically the relationship that Saudi Arabia has with the United States," Roget added. "So this game has tremendous geo-political implications."
Russia's resurgence has been astounding. In just 5 years it's increased oil production from 5.9 to 7.3 million barrels a day, and within another 5 years, some predict Russia will pass Saudi Arabia as the world's largest oil producer.
"I think Russian production has nowhere to go but up, oil analyst Steven Dishevsky of Aton Capital told CBS News. "To put it in a number: the global oil supply this year increased by about one million barrels per day. Half of that came from Russia."
But some wonder why the Russians have been so eager to push up production and push down prices.
"Picking winners in an oil price war is like picking winners in a nuclear war," warns Dishevsky. "There are none."
...except of course the consumer. For now, consider your lower gas bill a gift from America's new oil ally.
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