Academic journal article Asian Social Science

Application of Flow Methods for Material and Financial Resources Management to Forecast Oil Production in Russia

Academic journal article Asian Social Science

Application of Flow Methods for Material and Financial Resources Management to Forecast Oil Production in Russia

Article excerpt

Abstract

The paper considers the impact of flow methods on long-tenn development of oil extracting industry, the impact being associated with mineral resources production tax variation. Six oil production scenarios for Russia have been considered, comparative analysis of these scenarios is presented. By the end of the calculation period, the scenario that provides for 5% decrease of tax burden closely approximates the scenario of oil production under effective taxation system In terms of budget receipts volumes. The scenario with mineral resources production tax rate increase is the worst in terms of oil industry growth leading to the industry collapse. According to this scenario, an operating company's tax burden increases to 78%. So far, the world practice has not witnessed economic growth under conditions of taxes as high as this; furthennore, taxation history testifies that too high taxes have not been paid. In terms of oil industry growth, the scenario that provides for 5% decrease of tax burden is the most credible and promising, provided the released flows are invested in production. The same level of tax burden decrease (5%) is required to attain oil production levels in Russia in 2018-2020s according to the 2030 Development Strategy.

Keywords: effective taxation system, flow investments, expenses, flow, flow method, mineral resources production tax, oil production, tax burden, tax burden threshold

1. Introduction

Steady growth of population is associated with increase of natural resources consumption. For the last 50 years, the world population has grown more than three-fold, from 2 to 7 billion people. It is estimated that population growth will continue to become 9 billion by 2050. Some analysts hold that the Earth's resources will not suffice to provide more than 8 billion people. It should also be remembered that population of countries with developing economies want higher standards of living and this can only be done with higher per capita energy use. (World Population in 2011. - URL: http://gtmarket.rU/news/state/2011/10/31/3701)

The most powerful driving forces of energy demand are population growth and increased revenue. According to British Petroleum "World Energy Outlook 2030", starting with the twentieth century, the world population has increased more than 4 times, the real income - 25 times, and the primary energy consumption - 22.5 times. (BP Statistical Review of World Energy. - URL: http://bp.com/statisticalreview)

To date, no alternative source of energy can replace the need for hydrocarbons. Renewable energy (solar, wind, tides, thermal waters, hydroelectric power plants, etc.) are some successful examples of implementation, but their widespread use is unpromising because of the high cost of implementation, low efficiency and limited territorial locations of energy production. Nuclear energy alone cannot provide the necessary energy requirements, and after the recent events at the Fukushima nuclear power plant (Japan) the attitude to this type of energy has been negative.

Despite the efforts and achievements of the world fundamental science to develop new sources of energy, all the world's energy agencies recognize that in the first half of the twenty-first century, major energy carriers in the world are oil and gas.

It has been generally recognized that oil, being a unique fuel, is a nonrenewable natural energy source with depleting reserves and irregular consumption. World hydrocarbon resources are not evenly spread, both in terms of area and stratigraphic sequences. It would seem that the global distribution of oil consumption should follow the natural law of irregular distribution of hydrocarbon resources; however this is not the case, which is evident from oil consumption trends in the USA. If we assume that all countries reached the US level of average per capita consumption, world oil production would have to be increased five-fold. Even considering rapid growth of technology we are all witnessing, the present-day consumption pattem would require resources of several planets similar to Earth for the above assumption to become true. …

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