Mineral Fuels in Russia

In his essay on resource development in the Soviet economy, Demitri B. Shimkin, professor of anthropology and of geography at the University of Illinois, has this to say about the mineral fuels:

PRODUCTION.

With excellent resources which are increasingly well explored and with heavy investments of manpower and capital, the Soviet Union has been able to achieve a sevenfold expansion of energy production since 1928. In fact, by 1960, Soviet energy production (736 million metric tons of standard fuel) exceeded that of Western Europe (the OEEC countries) and was almost half as great as that of the United States. Moreover, the structural changes in Soviet energy production since 1928 have been favorable. The share of oil and natural gas has risen from 17 to 36 percent, and that of coals (excluding lignites), from 28 to 43 percent, while fuelwood in particular has dropped in importance.

By 1972, the Soviet Union anticipates another 120 to 130 percent increase in energy production. By that time, nearly 60 percent of all energy is to come from petroleum and natural gas, a pattern emulating US energy production in 1955. Atomic energy plans, which earlier called for large contributions (10 to 15 percent) to the national energy supply from this source by 1972, are now clearly in abeyance. Shortages of ore and electric power, competitive military demands, and unfavorable reactor economics have apparently led to this change.

CONSUMPTION.

In the USSR as in the United States in 1955, about half the national energy supply has been devoted to industry, including atomic uses. Energy consumption per industrial worker was 32 percent as high as in the United States in 1955, and had increased by a fifth by 1960. In 1955, the efficiency of Soviet industrial use of energy was about 85 percent of the American level.

Soviet inputs into atomic uses have climbed from 3-5 billion kilowatt-hours in 1955 to 20-40 billion in 1960. Aggregate inputs since 1950 have been 20 percent or less those of the United States.

Transportation and storage consume about one-sixth of the Soviet energy supply, compared to a fifth in the United States. This reflects the virtual absence, now or in the planned future, of private cars in the Soviet Union. The efficiency of Soviet domestic commercial transportation in 1960 equalled that of the United States in 1955, thanks to partial shifts from steam to diesel and electric locomotives, and to austere use of flexible but costly trucking.

Soviet agriculture now consumes slightly more energy than US agriculture did in 1955. Inputs per cultivated acre are, however, only two-thirds as great.

Aggregate Soviet household energy consumption per capita failed to rise between 1955 and 1960, and was about one-fourth that of the United States, excluding fuel used by private cars.

Since 1955, a moderate under-fulfillment of energy-production goals, combined with accelerated exports and rigid allocation policies favoring industry, transportation, and the urban economy, have resulted in no less than a 10 percent decline, by 1960, in rural-household energy consumption. This deficit, with its consequences for rural living standards, has undoubtedly contributed to Soviet agricultural difficulties since 1958.

FOREIGN TRADE.

Since 1955, Soviet net exports of mineral fuels have risen very sharply. By 1961, they reached 66 million metric tons of standard fuel [in terms of heat value, 27 times as high as in 1955]. For 1965, the Soviet target is about 150 million metric tons; for 1972, 265 to 320 million metric tons.

These exports are taking an increasingly large share of Soviet mineral-fuel output: 0.5 percent in 1955, 9.4 percent in 1961, with estimates of about 15 percent in 1965 and perhaps 18 percent in 1972.

Given Soviet plans for the continued maximization of military-economic strength rather than consumer welfare, the Soviet Union can export increasing portions of its mineral-fuel output only by severely restricting the use of private cars, housing space, single-family dwellings, hot water, and appliances. Pressures on residual claimants in rural areas are likely to intensify even further.

Mineral-fuel exports have served primarily to gain foreign exchange (and barter credits) for trade with Western Europe. Their share in the value of all Soviet exports outside the Communist bloc has risen from one-seventh to more than a fifth of the total. Shipments of mineral fuels to Western Europe via the Eastern European satellites and Egypt add at least another quarter to this value.

The Soviet Union has supported its foreign marketing of mineral fuels by expanding its tanker fleet, beginning the construction of pipelines westward, and developing acceptable standards for export grades of petroleum products other than residual fuel oil. Nevertheless, since three-quarters of the Soviet oil is shipped as crude or residual fuel oil, the Soviet Union fails to maximize the foreign exchange returns on its resources by adding value through fabrication. Moreover, its bilateral deals, although undoubtedly valuable in gaining particular scarce goods or achieving desired influences, are less effective in larger markets.

The Soviet Union has captured the energy markets of Iceland, Finland, and Greece, and is influential in Austria, Sweden, Yugoslavia, and Italy. Expanding Soviet sales to West Germany and Japan have as yet had minor impacts upon these large markets.

Soviet exports to its Eastern European and Far Eastern satellites, transshipments apart, have been limited essentially to the support of moderate military requirements. In contrast, Cuba has become totally dependent upon the Soviet Union for its energy supplies.

Future Soviet prospects for marketing mineral fuels in Western Europe will depend upon the magnitude of energy deficits in the Common Market and the United States, Soviet domestic capacities for restraining consumer demands, and the degree of viability of alternative energy sources in the Middle East, Africa, and Latin America.