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Unformatted text preview: chase affects the costs of all oil consumed.
From the perspective of the United States, this constitutes an externality.6 On the other hand, the
fact that the United States faces a rising supply curve for oil gives it monopsony power. To the
extent that America, or a group of consuming countries on a comparable scale, takes concrete
actions to reduce the size of its purchases, it can lower the market price of oil. This can
happen by accident (as, in the past, through economic recessions) or by sound public policy,
which is the preferable path and the one Elhefnawy advocates. 5|Page Russian Oil DA BDL
Russian Oil Disadvantage 1NC C. Internal Link – Decreasing oil prices will collapse the Russian economy
Ben Baden, Reporter at U.S. News & World Report, 2011
(“Russia Stocks Soar on Rising Oil Prices,”4-5, http://money.usnews.com/money/personalfinance/mutual-funds/articles/2011/04/05/russia-stocks-soar-on-rising-oil-prices)
"[Russia is] truly one of the major global beneficiaries of higher gas prices," says John
Derrick, director of research at U.S. Global Investors. While higher oil prices are a cause for
concern in the United States, they are providing a lift for resource-rich Russia, the world's
largest producer of oil and second-largest producer of natural gas as well as the largest non-OPEC
exporter of oil. Vlad Milev, manager of the Metzler/Payden European Emerging Markets Fund
(symbol MPYMX), says the country's entire economy is reaping the benefits. The Russian
government takes a portion of oil revenues and distributes them throughout the economy,
Milev says, which creates a trickle-down effect for other Russian businesses and consumers.
"So that gives a boost to the economy as well," he says. So far this year, emerging markets have
struggled to keep up with developed nations like the United States for a number of reasons, most
notably unrest in the Middle East and higher inflation concerns. Year-to-date through March 28, the
MSCI Emerging Markets Index lost about 1 percent, according to Bloomberg. (The S&P 500, on the
other hand, gained about 5 percent over the same time period.) Of the four BRIC markets, Russia is
leading the way. The MICEX Index, which is made up of 30 Russian stocks from 10 sectors of the
economy, has returned 15 percent so far this year. The next -best BRIC performer is China, with a 5
percent gain for the Shanghai Composite Index. Brazil's Bovespa Index was down 2 percent as of
March 28, and India's Sensex Index lost 10 percent over the same period of time. Russia has also
gotten a boost from the ruble, which has gained about 7 percent against the U.S. dollar so far this
year. Derrick calls the ruble a "commodity currency" because it generally benefits from higher
commodity prices. "Roughly half the return [so far this year] has been currency related," says Derrick,
who also helps manage the U.S. Global Investors Eastern European Fund (EUROX). " The dynamics
are pretty favorable for the ruble." The largest Russia-focused exchange-traded f...
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This document was uploaded on 02/06/2014.
- Spring '14