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. Russian Winter Warmest On Record

Russian Minister of Industry and Energy Power Viktor Khristenko.
by Vladimir Zubkov
RIA Novosti economic commentator
Moscow (RIA Novosti) Jan 23, 2007
Russia has never had such a warm winter. This is the opinion of Vladimir Klimenko, Ph.D., who heads a laboratory of global problems at the Moscow Energy Institute. He thinks that this winter the average temperature in European Russia is eight degrees higher than in the 1990s. Is it good or bad for the economy?

When asked recently whether he liked the unusually warm Russian winter, Minister of Industry and Energy Power Viktor Khristenko did not give a direct answer. He said: "Well, Russia is a big country, and it is not warm everywhere, although the savings on all fuels are considerable. But on the other hand, prices on Russian hydrocarbons are falling...." So, are there more pluses or minuses in this weather aberration?

In the fall there was an official announcement that power cuts at industrial plants in Moscow and elsewhere would continue during this year's cold season if the temperature dropped to -15C or -18C. Last year, electricity was cut off at -30C. The Russian power industry barely survived the winter of 2005-2006 with its record cold weather. It was "at the limit of its potential," said Anatoly Chubais, CEO of RAO UES of Russia, who is in charge of electric power supply for the entire nation.

This is no surprise since every fifth region in Russia is experiencing a growing shortage of electricity. The hardest hit are the strategic regions - Moscow and its environs, Leningrad Region, the entire Urals, and oil-and-gas bearing provinces of Western Siberia. During the past year, the customer interruption duration index was 5,880 minutes - Russia left Europe far behind (the relevant figure for Italy was 191, Britain 63, and France 57).

This warm winter has reduced the demand for electric power and has made life for the electric power industry much easier, as Chubais admitted. The temperature bonus allows them to speed up the commissioning of new generators. In the next several years, Russia is to put into operation 1,500-5,000 megawatt capacities, which will annually cost it from $1.5 to $5 billion. Unusually high temperatures have not only alleviated the precarious position of the power industry, but also helped make tangible savings - several billion rubles per month.

Uninterrupted electricity supply is positively affecting the operation of many industries. It is obvious that builders are making huge profits from the warm weather, saving billions upon billions of rubles. This winter, they do not have to stop work at construction sites because of snowfalls or freezing weather. When laying foundations and engineering communications, they do not have to warm the ground or solid concrete after casing. The amount of frost-resistant admixtures or concrete compounds is much smaller. It has been estimated that building and assembly works cost 5% less, and finishing operations, which require indoor heating, are from 10% to 12% cheaper. The warm winter weather allows the builders to increase the speed of construction by 30% against average winter rates, and gain bigger profits.

Road builders have also benefited. Thousands of tons of fuel have been saved by idle snow removers. Tens of thousands of tons of sand, granite chips, gravel, technical salt, and liquid chemicals for clearing roads of snow and ice have not been used. To illustrate the scale of saving, let me say that this year St. Petersburg's municipal budget has allocated $1 billion for the purchase of all dicers and 100 street cleaners. The Moscow budget operates with much higher figures. You can imagine the savings on a federal scale.

But a warm winter has its minuses for the same road industry. In northern areas, which lack proper highways and bridges, drivers have traditionally used winter roads on frozen rivers and lakes. Some of them withstand the load of heavy-duty pipe and logging trucks. These winter roads are equipped with road signs and are regulated by the traffic police. Road builders build up the ice by sealing it with wire ropes and reinforcements. But now the bulk of ice crossings are shut because of the warm weather and thin ice. For instance, out of 44 traditional crossings in the Arkhangelsk Region fewer than 10 are in service. The situation in the Republic of Komi and Yamalo-Nenets Autonomous Area is much the same.

Ice bridges and winter roads are mostly used for the removal of the timber procured in summer to railroads, or to places where rafts are made to transport wood in spring. For this reason, loggers are sustaining losses on a par with northern road builders. Raft building from procured wood is already a month and a half behind the schedule. There are delays in delivering pipes for pipelines under construction.

The Russian agrarians are concerned over the winter aberration because it has a delayed negative effect. Lack of snow in the fields and mild temperatures have precipitated the growth of winter crops, which will perish without snow even with the advent of average frosts. The hopes for a harvest will go up in smoke. Some experts think that the absence of snow may lead to spring draughts in European Russia. At the same time, the majority of agricultural lands are located in the area of high risk farming, and the farmers there have long got used to any weather whims.

It is interesting to analyze the warm winter's influence on utilities providers. Many economists predict that some of them will become fabulously rich. Seasonal heating tariffs do not depend on whether it is -30C or +5C (there are no heating meters for private owners). Utilities providers buy heat from district heating plants and supply it to the clients depending on the temperature. Thus, the customers are paying for heating as usual, whereas the communal services are spending on it much less.

Not only Russia but also many other countries are struck by unseasonably warm weather, which is bound to affect global prices on energy sources. In the first week of January Russian oil became 7% cheaper, although this reduction has not yet affected the scale of exports. As for gas, it is sold abroad under long-term contracts and the price is determined in advance. So, there are no losses here. Oil and gas producers also have obvious pluses - they are saving on energy at drilling rigs and refineries, and spending less on the renting of icebreakers to lead tankers to oil ports. Production does not slope so steeply as it usually does in winter.

The domestic demand for oil fuel and gas is somewhat smaller. It is enough to recall the first electronic bidding for gas at the end of last year, when gas prices were lower than expected. This was no surprise at all - extremely high temperatures during two winter months in the Northern Hemisphere reduced prices on energy sources on all global markets.

However, despite the dependence of the Russian economy on energy exports, this mild weather is generally a favorable factor. First, we are ready for a potential drop in oil prices - we have the Stabilization Fund as our airbag. Second, Nature has given a respite to the electric power industry - they can speed up its transformation without being distracted by troubleshooting. Who knows what surprises next winter has in store for us.

The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.

Source: RIA Novosti

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Top US Firms To Urge Congress To Fight Global Warming
Washington (AFP) Jan 19, 2007
Some of corporate America's biggest names, including Alcoa, General Electric and DuPont, will urge the US Congress next week to act swiftly to help offset global warming, an environment partnership said Friday. The United States Climate Action Partnership (USCAP), of which the three corporations are key members, said its members would issue a call to reduce greenhouse gas emissions and the findings of a year-long report on Monday in Washington.

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