Yes, this type of thing is sometimes referred to as the "Dutch Disease." No need to invest in a semiconductor industry, an auto industry, etc. when you can simply sell petrochemicals and buy them abroad. The effect is that modern Russia has "hollowed out" its economy to the point where it has no functioning industry much beyond military hardware and oil/gas.

Having an oil field is like being able to print money without the inflation issues. At first, it’s great, the country is flush with cash and can buy whatever it wants to. But when you can make more cash from working in oil than doing other things, you become less willing to work in other areas. And if you can import things, you can buy the stuff you would otherwise produce with oil money. This does terrible things to your economy.

One of my professors was actually one of the first young engineers there in the 60s exploring Siberia for all kinds of resources. He had told us quite a few stories from that period of his life and his own parable about the law of large numbers when he lost his friend due to an accident. Interesting enough that the world first device to measure bounced off waves (which was called reverberometer) was developed in our institute in western Ukraine. That professor was not some average Joe though, he was actually one of the best soviet and ukranian engineers/scientists in his field (judging by his golden and silver medals, yes that was a thing in soviet union).

Actually the USSR did have to develop own computer/semiconductor industry due to embargo on more advanced technological products. Nonetheless, the hard currency from the 1970s oil bonanza allowed to ignore growing problems with its economic system, such as woefully ineffective agriculture (for instance, the USSR imported grain from USA) or to waste more resources on arms race and economic/military aid to its third world client regimes.

Another great video. I learned so much, and this is coming from a fellow who started with Shell Oil in 1977 and went on to work in 15 countries around the world, before retiring in 2012. Your research is excellent. Thank you for all the work, and then sharing.

"... young, under 35..." 37 yo here, can confirm anything over 35 is old. Asianometry bringing only the hard facts as always. ❤️

I knew pretty much nothing about chips, nodes or litography and I ve binge watched Asianometry's entire list. This video is also super interesting and about the topic in which I normally dont have much interest. Superb channel.

This is, hands down, the best video on the post-WWII Soviet oil economics on KZfaq! Just one comment, though: it's a double oversimplification to say something along the lines "it's easier to drill oil than to make computers" since, on the one hand, USSR desperately tried to build a viable computer industry of its own, as you yourself covered previously, and, on on the other hand, Russians would use profits to buy mostly manufacturing equipment from abroad (almost exclusively that - pre-WWII) - anything to help them build other sectors of economy. Post-Soviet Russia is, of course, a completely different story: it used its foreign trade profits on two major sets of items: consumer goods and, surprise, foreign tourism. Would love it if you could cover this other half of the story - the spending of foreign trade profits in the USSR/Russia - as well. And one again huge thanks for your ever more professional exposures!

Pushing out videos like crazy lately! 👍 Loving it.

There’s a very interesting book I read sometime ago on this period in Soviet history called ‘Red Plenty’. A semi fictional account of the atmosphere of backsliding that started to take place after an initial push in technological progress. I’d highly recommend it, the way it’s written really humanizes the nature of soviet life.

There was so much waste due to electricity and heating being so cheap. The water radiators in your house were connected to a central heating system which were supplied by hot water from kilometres away by boilers of local industrial complexes or by heat power plants. The hot water pipes were often on the surface, and though they were insulated, they were still pretty hot to the touch. They would all start to rot from leaks, snow melting on top of them and its own heat, and stay that way without being replaced or upkept. Cats loved sitting on them in winter, you'd see dozens of them sometimes warming up... In Moscow there was an open HEATED swimming pool which worked through the winter, something impossible in a free market economy. The local Pushkin museum complained a lot because the humidity generated was so great, it started to ruin the interior and the historical artefacts. It was eventually closed down and church was built on top of it. You also could hardly control the level of heating in your radiators, even if there were some valves, they were so clunky or rusty most wouldn't be able to turn them. People just opened their windows in the middle of winter to cool down the house. The radiators in my house were raging hot, for instance. Also the heating would be delivered when some bureaucrats at the heating state corporation decided, not when the colds have arrived, and wouldn't turn it off when it was already hot outside. It was mighty annoying, the heating plan wouldn't be changed, you'd get a service (heating) when you didn't need it, and not get it when you needed it. You also payed for heating all year around! It was to "keep the prices down in winter". I think it's just a cheeky way to add another venue of taxation. When we transferred to a market oriented economy, it was immediately obvious how expensive and inferior the central method of heating was. Every new house built now comes with a boiler and the Soviet houses are being retrofitted whenever they can. Most can't, since most Soviet houses were tiny. Unless you lived in a 'party house' which was delivered only to big party members. Funny enough, if you look at them today, they are quite small and meh compared to new apartments being built in my city today. New apartments are much more luxurious and have a ton more amenities. There was so much inefficiency back then due to cheap energy being available, it's crazy to look back...

This put's what happened at Chernobyl into a much more understandable context. The standard western view by many commentators is that the Soviet system created an environment of secrecy, lies and incompetence that led to one hand not knowing what the other was doing and people not trained to think for themselves or to question irresponsible instructions or reactor designs. And while all of that has a basis in reality and fact the truth is that the Soviet's simply had no other choice but to A) build our their nuclear power generations as quickly and as cheaply as possible and B) put massive pressure on the people responsible for doing so to get those reactors and plants up and running fast and at low cost. In that way nuclear power was going to be how they bootstrapped themselves through the oil crisis they were facing and continue to meet the power production needs of their own country and their client states. Gorbachev was right, Chernobyl DID cause the collapse of the Soviet Union not because it exposed the corruption or the lies or the secrecy but because it caused a collapse in the plans of rapid nuclear power expansion and cost the country billions in clean up cost that they couldn't afford to pay.

The great Russian scientist Mendeleev said using oil for energy is like using banknotes to fuel a stove. So far it seems he was right.

Your videos show me how small my brain really is. I have learned so much from you!

Even in a command socialist economy, higher salaries have the same effect of getting people out there

Superbly researched, and clearly delivered. My compliments.

The role of oil in the collapse of the USSR is greatly exaggerated. One of the main problems of the USSR was the emission of money (as in the U.S. and the EU in the last 20 years, but adjusted for the fact that the USSR was a closed country and had no way to export inflation to other countries) to cover the budget deficit and for important projects. The Soviet party bosses believed that it was not dangerous for the economy, it could always be stopped. Oil helped partially offset the effects of the money issue by increasing foreign exchange earnings. The fall in world oil prices was an additional blow. By the end of the 1980s, the Soviet monetary system was finally unbalanced. Wages were rising, people had a lot of savings, but nothing to spend them on, empty store shelves, and a shortage of everyday goods. P.S. In a planned economy, there is no inflation formally, prices are regulated by the state, but in fact it exists and leads to a shortage of supply, i.e. empty store shelves.

Romania's oil production was small. Romania depended on Soviet oil as much as the rest did, but Soviet Union wanted a say in the way development was planned, and their ideas were a bit bizarre so Romanian Communists found it more profitable to buy oil and gas at spot prices than accepting the subsidy and the interference. In exchange Romania invested a lot, but really a lot in hydro power, which covered over 30% of consumption (industrial and domestic). This attitude lead to Romania having the cheapest electricity in EU :) ... actual prices for consumers (domestic or industrial) are around EU averages but that price includes a lot of tax (about 40% excise duty plus whatever VAT is now). The excise duties were raised during the 1990s because Germany claimed Romania's cheap energy prices were an unfair advantage. edit: fixed spelling error

Thats what Im talking about. Your videos are uniques. Theres no channel with stuff like this. Well done, Sir!

Wow this should be in every highschool curriculum. Insightfull and well explained.

Great coverage of a timely topic. I had previously heard of the arms race and Chernobyl as being major contributors to the Soviet Union's dissolution. But I had not previously heard of their energy sector being an issue. A companion book that likely overlaps with some of what's presented here is entitled 'Blowout', published in 2019. Russia is discussed, but is just one of many nations.

Great video! Amongst others, the Soviet Union was apparently also plagued with the "Dutch desease". Wasn´t aware of that, but it makes total sense.

Really awesome episode. I didn't know this history. Thank you!

This was one of the best from this channel.

Well done. This channel always has something interesting.

@4:02 there you say 261 million tons, but the slide says 261 million barrels.

Is that an AI generated image of a refinery at 15:28?

great video! very well-researched, as always.

"As low as -27 deg C" That wouldn't be too bad, it gets a lot colder in Siberia. Try -55 deg C.

Another fine example of your excellent research and production Sir!

Just outstanding. Thank you!

Very informative. Thank you.

Fasciting insight. Knowing things like this make a lot of the other stuff that was happening at the time make sense

Really interesting, thanks for the sharing!

Very interesting. Thank you for your hard work

As a Texan, I appreciate the use of Texas as a unit of bigness.

i waited enough. thank you))

Turns out greed and a hunger for unsustainable growth are not a unique feature of capitalism but intrinsic to the human condition.

That is a perfect example of the resource curse! Thank you for your work.

Great video!

You chose a flattering angle showing vienna :) thanks

very good analysis and video!

8:11 To be fair, 27.2 million square meters is only 27.2 square kilometers.

15:00 The most interesting thing about this photograph is the stark contrast between the cars in the foreground

Great history lesson 👍

Well done!

Very well researched and interesting video. Well done. What are your sources?

nice job!

Is there any chance you'll be uploading again to the podcast version of this? I really appreciate being able to listen to your insights at work where I can only use audio. If not, it's not big deal, I get it's a lot of work and I appreciate the effort regardless.

Basically boom and bust economics. Their oil and gas exports were lucrative… while they lasted. But when their supplies began to run out and foreign competitors came on the scene reducing the price of oil, it all collapsed. The problem is, it costs x amount of money to get the oil out the ground… The more scarce the oil the harder it is to pump out, the more expensive it is. And if the market price of oil drops below a certain figure, you make a loss pumping out this scarce oil that’s hard to get to. I’ve known western oil rigs having to shut down production when the price of oil drops too much. The biggest question is, which oil producing country is next?

Asianomertry great talk. Your one of the best

Excellent analysis and presentation I daresay, as someone with a superficial understanding of that all. Some time around 1979, the main levers determining the course to our present situation were pushed...

A prime example of Dutch Disease. Thanks for this series.

I didn’t even notice I was early lol. Nice video

Great presentation. This is what I have been wanting to discover for many years. Thankyou.

Brilliant! One of Russia's best economy researchers came to the same conclusion as you did. Well researched and well done.

AI generated refinery at 15:28?

4:05 Is the "tons" supposed to be "barrels" instead?

Please do a video on the future of semiconductor manufacturing in Europe

It is not about oil - Norway also has oil for example and USA also has a lot of oil, it's about bureaucracy in power up there

Díky!

The latest Asianometry episode on Spotify seems to be from June 29, 2022, and not up to date.

Some people have described Russia as a militant global gas station. They weren't wrong IMO.

Very interesting.

Please do one video as 3rd in the series on post Soviet oil industry in Russia 🙏

I wondered if you'd get to this....thank you. Not used to hearing oil production in tons.... Wikipedia says there's 7.46 barrels/metric ton....hmmm....

this is why food security is the number 1 priority, while energy and industry would follow

7:53 aw that stamp is cute, love the soviet aesthetic :D

I'd argue oil didn't hurt the Soviet economy, it WAS their economy. They had a backwards economic and political system and their economy was 3rd world until they cranked up oil production. Their mining industry was cheap thanks to cheap labor and cheap fuel, their manufacturing was cheap thanks to cheap minerals and energy, and their farming only got to a level where it could feed their own people thanks to all the oil derived fertilizers. Their economy tanked every time oil prices dipped and thanks to the aforementioned backwards polticial system they couldn't adapt. Everything the Soviets did was inefficient but their entire empire was just barely propped up through rock bottom wages, cheap energy, cheap materials, and fuel and mineral exports. A million years ago I read an economists quote about the USSR. He compared them to a bike with a hole in its tire but rather than fix or replace the wheel they just kept pumping their tire pump harder and harder to make up for the leak. It was unsustainable even when things were at their best, and even a slight bump in the road could spell doom

An oversimplification of the difficulty in running an effective centrally planned economy. Especially one competing, and partially interacting with, a much much much larger market based economy.

I love how he says -27 celcius like it's something out of a horror movie, it's cold but not that cold

So happy for Part 2 of USSR oil industry !

Primoroso.. Parabéns.

1:25 -27°C is average winter temperatures in some areas. Usually it's -15 to -25. But -40 and -50 are common

As a former teacher your information is FANTASTIC!! Perhaps what surprises me the most was just the ARROGANCE of those in charge. No oil or gas field will last forever. That was chutzpah at it's finest

Thanks

Or in the modern, post soviet iteration: Germany was buying Russian oil and gas and selling their goods and services in Asia, primarily in China. Now, there’s a shift. Chinese won’t consume European goods and services, eu wouldn’t buy Russian gas and oil. Will China start buying out Russian resources to offer its goods to the world - remains to be seen. But the tide had shifted due to the Russian invasion in Ukraine

Well done. "You are a one-man PBS channel." :)

You always surprise me, for good.

Like back in time Spain. Having flow of gold and other goods from the colonies made life comfortable, so why produce something when you have enough gold to buy it

I tuned out when you stated the estimated and actual decline figures in Soviet production. 150 million tons is 1.125 million barrels, so either it didn't decline much if at all, or you got your figures wrong and stated a decline happened. Either way, inaccurate.

I had no idea that Switzerland was a part of Czechoslovakia during the 1970s.

Resource curse.

-26C Try Canada at -40C/-40F da konrad lots ice special wintercold operation.

In severe cold, does oil still come out warm from geothermal heat, or does the surface cold still make it harder to move??

Fantastic production and an interesting episode, a pleasant norm on this fine channel. but ! "thusly" doesn't exist 'thus' is its own -ly i don't mean to be that guy, pointing out minor grammar imperfections. was corrected myself on the word & have since quit the "-ly"

Hey i really apreciate your content but this would be sooo much better if you could give unites not in miles or some stupid non standard unit thanks

It is not entirely true that energy trading within communist block (more precisely within CMEA) was unfavorable to the Soviets. First of all, it was the cost of running the empire. Should energy supply from the USSR dry out, countries of the Soviet block were likely to go down in social upheavals and turn to the west. Second, the USSR was extracting from the satellite countries their valuable economical output. Since all currencies were not exchangeable and had arbitrary rates with redirect to gold or dollar, the exact advantages or disadvantages were difficult if not impossible to ascertain. The worst problem was that as soon as any communist country managed to produce something that could be sold for hard currency it would meet its obligations within communist block only grudgingly, as all these countries were always heard currency starved. Therefore, the net and paradoxical result of the within CMEA trade that everybody was losing and mutual incriminations and resentments were building up. The rest is history - as soon as Soviet grip lessened everybody ran away as quickly as possible.

Really loving your USSR videos!

1:26 "Temperatures dropping as low as -27 celsius" **Laughs in Canadian**

Same thing happened to the Spanish with the south american gold, and now to the gulf states, Iran ("thanks" to western sanction they have to devellop their own agricuture and manufacturing!), Algeria, Nigeria, Venezuela, ...

Oh apologies great video many thanks

It is nice to look beyond the public mass-media narrative of simple, easy to tell stories about how everything bad everywhere was fundamentally flawed in some way and everything good is always a result of some underdog going above and beyond to figure out clever workarounds in the system that eventually were developed further. And I'm not just talking about the Soviet Union

You know what's (not) actually one of the funniest things of the world, Venezuela basically committing the same mistakes the soviets did, it's like they were playing to a T the trope "Too Dumb to Live".

“With temperatures plunging to as low as… -27 degrees Celsius” funny funny man

Of course the name Boris Shcherbina would apppear.

Thanks. Will be interesting to see an update to this in a year or so as a result of the change in the attitude of the EU in answer to the ill conceived Soviet-Ukranian War

You only need to better compile your sources for easier verification and cite more.

That concept is called Dutch disease, a country depends too much on one sector such that when that sector declines the whole economy goes down with it. The gulf states are trying to avoid it by diversifying into space travel, sports and tourism.

So true