Abstract

This paper discusses the transition of the Former Soviet Union (FSU) within the context of a 1987–1996 Soviet and FSU oil production decline. The conventional explanation of the break-up is that economic inefficiencies and the Cold War defense build-up caused it. Another possible explanation, one that is examined at length here, is that declining oil production was a contributing factor. The econometric analysis suggests that the fall in Soviet and former Soviet GDP in the 1980s and 1990s did not Granger cause the decline in oil production, but the decline in oil production did Granger cause the fall in GDP. Coal and natural gas to GDP relationships show alternative Granger causalities that we would expect to see with oil, but do not. A multi-cycle Hubbert trend that may be used to forecast future FSU oil production is also shown.

Keywords: Oil production; Soviet transition; Resource scarcity; Hubbert curve

PACS classification codes: Q410; Q480; P230

Article Outline

1. Introduction

2. The two scenarios of former Soviet Union GDP decline

2.1. The conventional scenario

2.2. The Cold War scenario

3. The oil scenario

3.1. Oil production collapse

3.2. Technology and oil production

4. Energy and GDP Granger causality

4.1. Oil and GDP

4.2. Coal and GDP

4.3. Gas and GDP

4.4. Simple growth model

4.5. Discussion

5. FSU multi-cycle Hubbert curve

6. Concluding remarks

References