Oil is not just black gold, but an important resource that affects the lives of millions of people and the economies of entire countries. But how low and high oil prices affect countries such as Russia and the USA?
Let's try to figure out how fluctuations in oil prices affect the economies of these two countries, and why this can be a boon for one country and a real disaster for the other.
Share of oil and gas revenues in the gross domestic product (GDP) of Russia and the USA
The share of oil and gas revenues in the GDP of Russia and the United States differs significantly and reflects differences in the structures of their economies.
Russia:
In Russia, oil and gas revenues play a key role in the economy. For many years, these revenues accounted for about 30-40% of the total state budget, which significantly affects the country's GDP. In 2021, the share of the oil and gas sector in GDP was approximately 10-15%. However, depending on world oil prices, this indicator may fluctuate. With a high oil price, the impact of this sector on the economy increases, whereas with falling prices, the consequences for the economy can be very serious.
USA:
In the USA, the oil and gas industry is also important, but its contribution to the economy is much less. The share of the oil and gas sector in the country's GDP is approximately 7-8%. The energy scene in the United States is more diversified, includes many energy sources (including renewable ones), and therefore dependence on oil and gas revenues is not as great here as in Russia.
Comparison:
Contribution to GDP: The oil and gas sector in Russia makes a more significant contribution to GDP compared to the United States.States.
Economic sustainability: The U.S. economy is more resilient to fluctuations in oil prices due to the diversification of energy sources, while Russia is more vulnerable to changes in the global oil market.
Politics and budget: Oil and gas revenues in Russia not only affect GDP, but also significantly affect the state budget, while in the United States there is almost no such depech dependence.
Thus, the impact of the oil and gas sector on the economies of Russia and the United States differs both quantitatively and qualitatively.
The impact of oil prices on the economy
To begin with, it is worth understanding that oil prices fluctuate and their movements may seem unpredictable. This is influenced by various factors: supply and demand, the political situation in the world, changes in the global economy and even natural disasters. It is important to note that Russia and the United States depend on oil, but in different ways.
In Russia, as noted above, oil and gas account for a significant share of budget revenues - about 30%. This means that when oil prices fall, the government loses money, which can negatively affect the financing of social programs and infrastructure projects. While in the United States, the share of oil and gas revenues in GDP is about 8%, and the economy as a whole is more flexible and diverse.
Low oil prices: difficulties for Russia
When oil prices fall, it can lead to a real disaster for the Russian economy. For example, in 2020, due to the COVID-19 pandemic, the price of oil fell to $ 20 per barrel, which came as a shock to many. As a result, the Russian government had to work hard to balance the budget. Budget cuts, project freezes and social misfortunes are the consequences that the population felt.
On the contrary, low oil prices can be beneficial for the United States. Falling prices reduce production costs, which makes it easier for many industries to work. American companies can produce and sell their products at lower prices while remaining competitive in the market. Low fuel prices also mean less spending for motorists, and that's a nice bonus for everyone.
High oil prices: for whom is the holiday, and for whom are the problems?
As for high prices for oil, they can be both a boon and a burden. In 2022, when the price per barrel rose again to $ 90 and above, Russia received decent budget revenues. This has enabled the Government to invest more actively in the economy and social programs. The growth of oil revenues is sometimes associated with an improvement in the life of the population, but not everything is so simple.
For the USA, high oil prices mean an increase in costs. Many American companies may face increased production costs, which may then affect prices for consumers. We are also talking about greater dependence on oil imports, which threatens economic security.
Statistics: How did the prices change?
Let's look at some figures: here's how the price of Brent oil has changed over the past few years:
- 2018- the average price is about 70-80 dollars. 2019- the price decreases slightly, reaching $60.
- 2020- a sharp drop to $20 in April. The year 2021 is a slow recovery, the price reaches $70.
- 2022-2024- growth to 90 and above against the background of global problems.
These price fluctuations directly affect the economies of both countries and form different strategies for responding to market changes.
So, we see that oil is a two-sided coin. For Russia, low prices are problems, and high prices are a chance for development. For the United States, the opposite is true: low prices can be an advantage, and high prices can be a problem.
These differences highlight how important economic adaptation is. While Russia should look for ways to diversify its income, the United States can continue to develop more flexible economic models. Thinking about such issues, we understand that the impact of oil prices goes beyond the economy and affects the lives of each of us.
