The Oil Drum

Dear Mr Rouse,

I recall seeing that article. But it appears to emphasize insufficient economic and political incentives for production far more than the effect of "dwindling geologic resources." The former are certainly important, but are there any hard facts on the latter? Both China and Japan are eager for Russian oil. The Japanese are so keen to block Chinese access that they attached this condition to a proposal for funding a pipeline from Siberia. Having these two big powers fighting over your oil is great for business, perhaps most especially if you and the rest of the world are at or nearing peak.

(Here's a Feb 2005 CRS Report for Congress on Northeast Asia energy competition)
http://www.fas.org/sgp/crs/row/RL32466.pdf

Russia should have no incentive to increase its production.  It is currently exporting over twice as much oil as it is consuming.   If oil prices continue to increase it needs less and less exports to maintain the same revenue stream.  As it stands now the billions of oil dollars flowing into the Russian economy drive inflation, partly as a result of the policy of requiring part of foreign revenues to be converted into domestic currency.