"Black gold" in the fate of Russia in tsarist and Soviet times: the country was so dependent on oil in different periods

2024 Author: Richard Flannagan | [email protected]. Last modified: 2023-12-15 23:55

A sovereign state loses its independence if external political or economic factors begin to influence the internal life of the country. In the late USSR, such a factor was the dollar exchange rate, which determines the price of oil and depreciates the ruble, worsening the state of the economy. Things were different in the Russian Empire and the Soviet Union before the arrival of Khrushchev: it was during these periods that the country was a self-sufficient state, exporting at the same time a minimum of barrels of oil.

What was considered gold in tsarist times, and why did Nicholas II restrict the export of crude oil

Before the revolution, oil was not called "black gold", since grain was considered a gold commodity at that time. Oil wells, located mainly in the Transcaucasus, produced raw materials that were used exclusively within the Russian Empire. According to historians, technical oils and kerosene were sold abroad, while the supply of crude oil has been limited since 1896. This was done thanks to the chemist Mendeleev and the Minister of Finance Witte, who advised Nicholas II to use raw materials for the development of the domestic industry: oil refining and mechanical engineering.

This state of affairs did not affect the budget in any way, because the replenishment of the treasury took place mainly at the expense of profits from state-owned railways and the wine monopoly. The proceeds that the state received from export operations with agricultural products (wheat, butter, chicken eggs, etc.) was used to repay foreign currency loans.

Where Stalin took the currency when oil production had not yet been put on stream

Industrialization, which in a short period of time changed the appearance of the young socialist state, was carried out by the authorities, relying on the profit, which, as in the tsarist system, was provided by grain. With the help of collectivization, it was seized from the villages and sold abroad, thus obtaining the currency necessary for the country. The proceeds from grain exports were used to purchase equipment and build factories.

Simultaneously with the development of industry, oil production also increased: in the 1930s it increased 2.5 times, but during this period there was only enough raw materials for the country's internal needs.

How Khrushchev's experiments in the field of agriculture destroyed a self-sufficient economy and what this led to

In the post-war period, the volume of oil production, which fell sharply due to the hostilities in the North Caucasus, was restored and increased annually due to the development of discovered fields in the Urals, in the Tatar and Bashkir Autonomous Soviet Socialist Republics, and the Volga region. Despite this, the supply of raw materials to other countries continued to be carried out at a minimum level, without bringing significant revenues to the state budget. This happened mainly due to weak foreign economic ties: the self-sufficiency of the USSR eliminated the need for currency, which was needed only in the case of purchases of foreign products.

The situation changed with the coming to power of NS Khrushchev, whose agricultural experiments significantly worsened economic ties within the country. If earlier Russia traditionally provided all of Europe with grain, then since the late 60s the Soviet Union began to buy it from other countries, including the United States. For such expenses, foreign currency was required, and in order to ensure its flow, it was decided to develop the export of crude oil.

How the USSR "got hooked" on the "oil needle" under Brezhnev

In 1968, the first well began operating at Samotlor, the largest oil field in the Union, discovered in 1965. It happened at the most opportune moment: the era of coal is a thing of the past, the world needed gasoline, petrochemical raw materials, aviation fuel. The tempting revenue from the resource with a reserve of 7, 1 billion tons of oil made it possible to gradually forget about the economic reforms carried out by AN Kosygin, putting an end to the vital transformations. By and large, this is what caused insoluble problems in the country in the mid-1980s.

But in the 70s the situation was more than successful for the USSR. After the West supported Israel in the Yom Kippur war against Syria and Egypt, an energy crisis began in the world, which led to a 4-fold rise in oil prices. The Soviet Union seized the opportunity to increase its sales of raw materials, resulting in good profits. True, even at this time, oil exports did not exceed those for other goods sold abroad - from fertilizers and cardboard to nuclear reactors and plant projects.

Why did the USSR's dependence on the "oil needle" as an important source of income intensify under Gorbachev?

The growing imbalance between industrial and agricultural industries, begun during the Khrushchev period, led the USSR to a chronic dependence on food imports. So, in 1985, $ 45 billion was spent on grain purchases - an amount much larger than the proceeds from oil sales at that time.

It was decided to compensate for the costs not by putting things in order in the agro-industrial sector, but by increasing oil production, the price of which fell sharply just in the year of the transfer of power to Mikhail Gorbachev. In 1988, a record amount of "black gold" was obtained - more than 620 million tons. Despite this, the inflow of foreign exchange decreased due to the low cost of a barrel, which caused a decrease in imported food, and, as a result, led to a shortage of goods with a deterioration in the standard of living in the country.

Why the USSR was unable to diversify its economy in order to sell, instead of crude oil, products of high-tech industries

According to the Soviet and Russian historian Yu. P. Bokarev, the reason why the Soviet Union only sold the extracted resources, and did not turn them into finished export products, was the reluctance of the leadership to understand the essence of the scientific and technological revolution in order to engage in transformations taking into account modern achievements.

The incompetence of the authorities, the absence of highly educated managers in it, capable of solving issues of the transition from an industrial to a post-industrial economy, practically stopped the development of the country. Instead of contributing to the development of promising industries, oil revenues were used only to support the oil industry and purchase foreign consumer goods.

Another cautionary tale of oil occurred in the Arabian Peninsula. There are poor tribes thanks to her turned their settlement into a land of luxury and wealth.