Estonia

Estonia Really a Leading Producer of Oil Shale?

A recent article in EU Business claims that Estonia has plans to further "diversify energy sources and boost electricity exports to other Baltic region EU states".  It goes on to say that Estonia is the "world's leading oil shale producer".  Is this possible for such a tiny country? 

For those with little background like me in oil exploration and production, the following research reveals some surprising results:

According to a 2004/2005 published account of the US Geological survey, there are approximately 410 billion tons, or three trillion US barrels of known oil shale deposits stashed throughout the world.  The US maintains 62% of these deposits, 70% of which are under federally managed land.  Oil shale is not to be confused with "oil" or "tar sands", most of which is buried in Canada - approximately two trillion barrels worth.

Mining and refining oil sands becomes cost effective when world oil prices reach $30 / barrel, whereas refining oil shale is much more expensive and only becomes cost effective at $80 / barrel... like now.

In any case, while Estonia may only maintain 14 billion barrels of oil shale reserves, i.e., just 0.5% of the world's total, it is a leading producer at 14 million barrels annually (see figure 19 of the US Geological Survey).  Given Estonia's tiny population and it's use of oil shale to generate electricity, the Baltic country could maintain energy independence from Russia and the EU - a huge relief given how the rest of the EU is dependent upon Russia for energy needs. 

According to EU Business, "The recently modernized Soviet-built stations are the world's largest oil shale-fired electrical power facilities. They play a crucial role in Estonia's economy, making it one of the few EU states boasting electricity self-sufficiency." 
Indeed, Estonia plans on being a net exporter of electricity given it's relatively low usage and large production capacity.

Nevertheless, refining oil shale is a messy and destructive business and environmental groups are pressuring the Estonian government to stop oil shale production.

In the meantime, Jordan has tapped Estonia's production expertise.  Should the US ever feel the need to refine oil shale, Uncle Sam may one day seek help from it's tiny Baltic ally.

The Globalization Index 2007

Worth Noting:

WASHINGTON, Oct. 22 /PRNewswire/ -- Hong Kong, Jordan, and Estonia debuted among the top 10 most globalized nations in their first year on the Globalization Index, an annual study produced by A.T. Kearney and Foreign Policy which assesses the extent to which nations are becoming more or less globally connected. The index is published in the November/December issue of Foreign Policy and is available at http://ForeignPolicy.com/globalizationindex.

Estonia Q1 Consumer Prices Rise 1.8% On Quarter, Up 5.2% On Year

(RTTNews) - Estonia Consumer Price Index - CPI gained 1.8% sequentially in the first quarter, the Statistics Estonia indicated Friday. Prices of food and non-alcoholic beverages recorded an increase of 3.0%. Price of manufactured goods gained 0.5% and service charges climbed 2.5%. On a yearly basis, consumer prices moved up 5.2% versus 4.5% in the fourth quarter

Estonia Q1 Construction Costs Surge On Higher Labor Costs

(RTTNews) - Estonia's construction price index rose 3.6% sequentially in the first quarter and climbed 15.6% from last year, the Statistics Estonia said Friday. The increase was due mainly to higher labor costs, the report said.

       

Labor cost showed an increase of 6.1% from the prior quarter for an annual rise of 17.3%. Costs of building machines rose 1.8% sequentially, while building material costs were up 2.3%. Annually these components rose 5.4% and 6.1% respectively in the first quarter.

       

Price indices for detached houses, industrial buildings and office buildings rose 3.6% each from the prior quarter. On a year-over-year basis, these indices showed increases of 15.5%, 15.9% and 15.5% respectively. The index for blocks of flats was up 3.5% on quarter, while rising 15.3% from a year ago.

       

Meanwhile, costs on repair and reconstruction work rose 3.2% on quarter and climbed 15.9% on year. Higher labor costs, with a monthly rise of 3.2% and a yearly growth of 15.9% were instrumental for the rise in repair and reconstruction costs.

Up Up and Away

(RTTNews) - Estonia average monthly gross wages and salaries grew 17.5% on yearly basis in the fourth quarter, the statistical office said Thursday. Average monthly earnings totaled 10, 212 kroons (approx. 850 USD) versus 9, 068 kroons (approx. 750 USD) in the third quarter. Average hourly gross wages and salaries climbed 19.2% annually.

Estonia Producer Price Index - PPI climbed 1.6% on month in January, the Statistics Estonia said Tuesday. The index rose 0.5% in December. On an annual basis, producer prices expanded 6.4%,larger than 5.9% recorded prior month.        

Export price index gained 1.7% on monthly basis and moved up 5.9% annually. Meanwhile, import prices fell 0.1% on month and advanced 3.4% on year.

Estonian real estate grows 33% in Q4

Estonia's real estate market was „a third larger” in the Q4 compared with the same period of 2005, the statistics office said.

The average value of property or land transactions was 1.4 million krooni ($118,000), Statistikaamet said on its Web site today. In all, 16,000 sales were concluded totaling 22 billion krooni in the three months ending December 31. The Baltic country's housing market is being fueled by Estonians' desire to move into modern accommodation and out of decades-old Soviet-era flats. Wages rose 16.5% in the Q3, boosting Estonians' ability to purchase real estate.

AS Hansapank, the biggest Baltic lender, said on February 16 its Estonian loan portfolio grew 50% in the Q4 to €6 billion ($8 billion). Estonian mortgage growth will „slow to some degree,” said Priit Poldoja, head of Estonian operations at AS Hansapank, in an online news conference on February 16. „Real estate prices have risen to a point where for many people, even in light of rapid wage growth, the opportunity of acquiring property is limited.” (Bloomberg)

Estonia's Q4 GDP up 11.2%

(RTTNews) - Estonia Gross Domestic Product - GDP rose 11.2% annually in the fourth quarter, a flash estimate from the statistical office showed Tuesday. In the third quarter, economy grew 11.3%. The statistical office noted that fourth quarter growth was led by expansion in manufacturing as well as wholesale and retail trade sectors. Further, transport, storage and communication as well as financial services impacted growth.

G-Dubya Likes Estonia's Flat Tax

For years, US conservative policy makers have been beating the drum of instituting a flat tax.  Yet when Republicans took control of Congress in the mid 90's, the beat faded.  It turns out that for various reasons a flat tax wouldn't necessarily be a boon to the American electorate nor business.  For instance, a flat tax would remove the tax shield benefits of interest expense deductions and could therefore cause housing and equity prices to crater.   

Nevertheless, a simpler tax code would make the IRS much more efficient and increase the coffers of the Treasury.  Its no wonder then that during his visit to Estonia in late November, George Bush praised the Estonian government for its flat tax and tightly run bureaucracy.  The President acknowledged Estonia's flat tax no less than three times during his half-day trip through Tallinn and was impressed with paperless government meetings that reportedly cut 3-4 hour policy sessions down to 30 minutes.

"I appreciate the fact that you got a flat tax, you got a tax system that's transparent and simple," and "an e-government system that should be the envy of a lot of nations," Bush said with trademark ineloquence during his toast to newly elected President Thomas Ilves before leaving for the NATO Summit in Riga, Latvia.  Unfortunately, his admiration for Estonia's efficiency likely won't translate into much when he returns home. 

Russian Grip on Electricity Loosened

Today the Estonian government inaugurated an undersea cable connecting Estonia with Finland.  Currently Estonia derives all of its electricity from oil shale, but is still connected to the Russian electricity grid which was built during Soviet times. The new undersea cable will enable Estonia and its Baltic neighbors to receive electricity from Europe via Finland for the first time ever.  Finland will import electricity from Estonia as well. 

Estonia is the only Baltic state that can produce its own electricity and exports power to Latvia and Lithuania, both of whom also depend on Russia for power generation. 

While Estonia will still look to Russia for energy needs, particularly oil and natural gas, the undersea cable now relieves the Baltic States and Finland from having to depend on Russia for electricity, a critical component for ensuring energy security and economic stability.  Just last month Russia announced huge hikes in natural gas prices to the former Soviet republics in the Baltics, and Belarus, highlighting the importance of reducing dependence on Russia for supplies of fuel and electricity.

"The new link enhances greatly the energy security of Estonia," Estonian Minister for Economic Affairs Edgar Savisaar said Monday at the Estonian opening ceremony of in Harku, near the capital Tallinn.