Russia » Economics
Author`s name Ольга Савка

Scientists Make Optimistic Forecasts about Oil Prices

It seems that Russian scientists know all about it

This is a goal of philosophers to find out, to which extent a science can be independent and unbiased. However, even most outstanding scientists live in one and the same world like everyone else, depending on their governments. Can scientists' conclusions be absolutely independent on hopes and expectations of the political elite of a certain country? This is a rhetorical question indeed.

Analysts of the Institute of Europe of the Russian Academy of Sciences have prepared a detailed forecast regarding the dynamics of world oil prices. According to their opinion, oil prices will fluctuate  within the limit of $20-25 per barrel during 2003-2004. It is amazing, but the Russian budget for the current year is calculated on the base of these very figures.

Specialists of the mentioned institute say that the world economy is to rise and grow again after the current recession. They believe that since the demand on oil will turn out to be unsatisfactory, the considerable amount of the Iraqi oil on the market will be practically unnoticed against the background of the enormous demand.

In addition to that, scientists think that OPEC will do its best in order to keep oil prices on the level $22-28 per barrel. However, the States will try to reduce the level down to $18-20 per barrel. Thus, scientists believe, world prices on oil will be stabilized around the level of $25 per barrel. This is rather good both for the Russian government and for domestic oil companies.

Scientists would seem to be light-minded, if they did not envisage another way for the situation to develop, an unfavorable one. Specialists of the Institute for Europe have made another forecast, if the growth of the world economy turns out to be not that strong. In this case, scientists believe, oil prices will unfortunately decrease, but they will remain within $18-20 per barrel anyway. This is the level of prices that American research centers recommend. No wonder: if oil prices go down, American oil companies might go bankrupt. This would cause a huge damage to the American economy. It deems that Russian specialists trust their foreign colleagues, and it does not even occur to them that they can be wrong.

Yet, scientists affirm that Russia will hardly suffer any damage in this case. Aleksey Kudrin, the Russian Finance Minister, said last September in Washington that Russia had a special scenario in case of a war in Iraq and oil prices fluctuations. Scientists of the Institute for Europe believe that Russian oil companies will definitely experience a lack of funds for their development. However, analysts of domestic oil companies say that it will cost huge money to reconstruct the Russian oil industry.

The Institute of the World Economy and International Relations of the Russian Academy of Sciences believes that such an unfavorable situation is unlikely to happen. Most likely, oil prices will remain on OPEC's level - $22-28 per barrel. Analysts say that the humanity is not going to use any alternative kind of energy carrier in the nearest future, so oil will remain on top. Moreover, the oil consumption is expected to grow a lot in the USA and in the EU by 20 percent until 2020.

Everyone wants to have stable deliveries and predictable oil prices. In contrast to the scientists of the Institute for Europe, analysts of the World Economy Institute think that OPEC is not likely to dictate world prices on oil , although the cartel's role on the world market will remain serious until 2015 or 2020.

The Russian Ministry for Economic Development and Trade has its own forecast of prices on the Russian "Urals" oil. The forecast embraces the period until 2006, it is more specific, albeit rather pessimistic. According to an optimistic scenario, the average oil price will make up $22-23 per barrel, the optimal one - $18,5 whereas the critical situation stipulates the price of $13,5 per barrel. The Russian government was going to calculate the budget of the next year on the base of $20 per barrel.

Analysts of the Russian Ministry for Economic Development and Trade have been rather cautious on account of coming parliamentary and presidential elections: they are afraid of provoking discontent and panic in the electorate. That is why, if a serious reduction of oil prices takes place on the world market in the nearest future, optimistic scientists will be someone to blame.

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