It wasn’t that long ago that we recommended avoiding equity stakes in most major oil companies for valuation reasons. As times have changed, we have changed our recommendation of the industry for fundamental reasons. First, like all global oil companies, the major Russian oil companies have been rocked by oil prices falling by almost two thirds as well as still being assessed at tax rates from when prices were high. We feel now is a good time to put these companies on your radar for the following reasons. First, we feel oil prices have bottomed and while we are not predicting exactly when they will rebound, rest assured they will in the not too distant future. Secondly, the lowering of export taxes will be lowered at the request of the government as increased oil production is a top priority. Lastly, these stocks present a compelling story just on a valuation basis, these bargain prices don’t happen often and at some point you might consider getting in on the ground floor.

President Medvedev, currently on a tour of South America has proposed, along with the President of Brazil, a four country summit meeting in Russia of the BRIC countries, Brazil, Russia, India, and China. This could be an interesting development in addition to, or to complement the future possible admission to the G8 of all the four leading, emerging economies in the world.

It might not be equal consolation for a global economy in recession, but inflation is not a problem in Russia presently, as everything from fuel to food, clothing to housing have stopped their inflationary trends of the past few years and have decreased in their cost. The Russian electric industry will be at least partially deregulated in the near future and hopefully any price increases resulting from this will be muted by price decreases in other areas. Long-term, this is good news for Russia as now people and businesses will be confronted by a more realistic cost of energy, thus encouraging them, in acts both big and small to be more efficient in energy’s use.

As part of efforts to combat the slowing of Russia’s economy, the government announced plans to cut the business profits tax substantially, to settle around 20%. Although this will add to the reduction in government funds, it is a good step for combating the recession now and a way to limit the severity of the effects. This is the way most countries should act, when the economy is suffering, targeted tax cuts to spur economic activity and lessen both the severity and duration of the recession.

In a positive sign things are returning to normal (at least as much as can be expected in these globally tumultuous times) the EU has agreed to support Russia’s admission to the WTO. This all but assures admission and is likely a sign the EU is eager for a more harmonious relationship with Russia on everything from energy policy to trade. Speaking of trade, President Medvedev is looking to promote Russia’s business interests in Latin America as he attends the APEC summit beginning this weekend.

Like the rest of the world we are waiting with anticipation for the G-20 meeting to wrap up. The administration in Moscow has indicated their desire for the Ruble to become a regional currency, and they have just signed an energy agreement with Belarus to price oil in Rubles. The dollar is coming under assault from an unexpected direction as Sarkozy of France has indicated his desire that the world diversify from relying solely on the dollar. Before I would have said this trend is going to develop slowly, how slowly I am not sure as the meltdown in the U.S. has changed the rules of the game.

If the question of the day is what does the approaching Obama administration mean for global energy prices. I believe I have a positive reading on the situation. Obama’s comments on the campaign trail reveal someone who is somewhat open on the issues of clean coal technology and even nuclear energy and we all know the importance he places on renewable energy. It is clear though, he opposes widespread offshore drilling, to mention nothing of what he believes regarding drilling in Alaska. With oil prices so low, one of his first acts is rumored to turn back some offshore drilling the Bush administration had planned to allow. In the intermediate term, this means when oil prices invariably start to climb again, the move up will be even more pronounced and long-lasting with much of America’s domestic production starting to decrease and major impacts of clean energy being several decades away.