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A Crude Problem For Putin’s Russia

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Russian History and Oil Prices

A Crude Problem For Putin’s Russia

Western sanctions against Russia that stemmed from the events in Ukraine have not yet put a significant dent in the country’s economy or changed their plans abroad. However, over the last three months, the slumping price of crude oil may be the factor that finally makes Moscow blink.

While Brent oil has traded throughout the year at around $110/bbl, it is only recently that the price has dropped to closer to $85. A combination of items have contributed to crude’s steep drop including a stronger US dollar, slowed economic growth in Europe and China, and increased US shale oil and gas production.

Some countries benefit from having oil as a cheaper input, but Russia is not one of them. Russia is the second largest exporter of oil selling 7.2 million bpd in global markets, which equates to about 45% of Russia’s budget revenues. Deutche Bank has calculated the breakeven price for Russia’s fiscal situation at an oil price at $102/bbl.

Oil prices and deficits for selected countries including Russia

The impact of this is already showing up in the Kremlin’s finances. Not only does Russia forgo extra revenue towards its budget, but it also hurts the exchange rate of the country’s currency. So far this month, Russia has spent upwards of $7 billion propping up the rouble, which is trading at record lows.

A previous crash in oil prices in the 1980s was at least partly responsible for bankrupting the Soviet Union, and this time the stakes could also be high. Putin’s support will stay high as long as business is good and the country keeps its pro-Russia stance. However, it remains to be seen what kind of pressure that a more long-term low oil environment will put on Putin and his administration.

Opening graphic from: RadioFreeEurope

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Energy

Visualizing U.S. Energy Use in One Giant Chart

This interesting diagram breaks down all U.S. energy use by both source and industry, and everything that happens in between.

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Visualizing U.S. Energy Use in One Giant Chart

If you feel like you’ve seen this diagram before, you probably have.

Every year, it’s assembled by the Lawrence Livermore National Laboratory, a research center founded by UC Berkeley and funded primarily by the U.S. Department of Energy.

The ambitious aim is to chart all U.S. energy use in one Sankey diagram, including the original energy source (i.e. nuclear, oil, wind, etc.) as well as the ultimate end use (i.e. residential, commercial, etc.) for the energy that was generated.

U.S. Energy Use in 2018

According to the research center’s most recent published version of the diagram, U.S. energy use totaled 101.2 quads in 2018.

In case you are wondering, a single quad is equal to 1 quadrillion BTUs, with each quad being roughly equivalent to 185 million barrels of crude oil, 8 billion gallons of gasoline, or 1 trillion cubic feet of natural gas.

Here is how the recent figure compares to previous years:

YearU.S. Energy Consumption% Fossil Fuels in Mix
2018101.2 quads80.2%
201797.7 quads80.0%
201697.3 quads80.8%
201597.2 quads81.6%
201498.3 quads81.6%

As you can see in the table, U.S. energy use has been generally increasing, eventually topping 100 quads per year by 2018. During this time, the total percentage of fossil fuels in the mix has dropped, but only from 81.6% to 80.2%.

Taking a closer look at the data, we can see that the largest percentage increases in the mix have come from solar and wind sources:

Source20142015201620172018Change ('14-'18)
Solar0.4270.4260.5870.7750.949+122%
Wind1.731.782.112.352.53+46%

Energy use measured in quads (1 quadrillion BTUs)

Solar use has increased 122% since 2014, while wind jumped 46% over the same timeframe. Not surprisingly, energy derived from coal has fallen by 26%.

Dealing With the Rejects

One interesting thing about the diagram is that it also shows rejected energy, which represents the energy that actually gets wasted due to various inefficiencies. In fact, 68% of all energy generated is not harnessed for any productive use.

This makes sense, since gasoline engines are usually only about 20-40% efficient, and even electric engines are 85-90% efficient. Put another way, a certain percentage of energy is always released as heat, sound, light, or other forms that are hard for us to harness.

As electric cars rise in popularity and as modern gas-powered engines also get more efficient, there is hope that the amount of this rejected energy will decrease over time.

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Mapped: Fossil Fuel Production by Country

These four animated cartograms show the nations leading the world in fossil fuel production, in terms of oil, gas, coal, and total hydrocarbons.

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Fossil fuels exist as a double-edged sword for most countries.

On one hand, they still make up a dominant piece of the current energy mix, and oil is still seen as a crucial resource for achieving geopolitical significance. It’s also no secret that fossil fuels are a driver for many economies around the world.

But with governments and corporations counting carbon emissions and mounting concerns about climate change, reliance on these same fuels will not last forever. As attitudes and policies evolve, they will continue to see a reduced role going forward.

Visualizing Fossil Fuels by Country

So, which countries are pumping out the most hydrocarbons?

Today’s cartograms come from 911Metallurgist, and the animated maps resize each country based on their share of global fossil fuel production.

Below, you’ll see four cartograms that cover oil, gas, coal, and total fossil fuel production.

Crude Oil Production

The United States leads this category, producing about 18% of the world’s total oil:

Oil production by country

Although the U.S. is the number one producer globally, it should be noted that the country doesn’t have the same quantity of oil reserves as other leading nations.

Weirdly, Venezuela has the exact opposite problem. The country has the most oil reserves in the world, but currently only sits as its 12th biggest producer.

Natural Gas Production

In terms of gas, the U.S. leads again with a 20% share of global production. Russia is also a gas powerhouse, with a 17.3% share.

Natural gas production by country

After the U.S. and Russia, it’s a fairly steep dropoff in terms of natural gas production. Countries like Iran, Canada, Qatar, and China are the next most significant players, but they each only produce 4-6% of the global total.

Coal Production

Coal use may be on the decline, but China still produces a whopping 45% of the world’s coal.

Coal production by country

China’s current relationship with coal is an interesting one.

Every year, coal has become less important in China’s energy mix – in 2011 it represented 70% of energy consumption, and by 2018 it had fell to 59%.

Despite this meaningful progress, China’s economy has grown so fast, that coal use has essentially held steady in absolute terms. Meanwhile, the country’s production of coal has actually grown slightly over the same timeframe.

Total Fossil Fuel Production

Finally, here is the sum of all three above categories, converted to metric tonnes:

Total fossil fuel production by country

The United States produces 20% of all global fossil fuels, with Russia and Iran rounding out the top three. After that comes Canada, which produces just under 5% of all fossil fuels globally.

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