by lowmemcpu on 7/21/20, 4:01 PM with 196 comments
by wiremine on 7/21/20, 4:32 PM
by supernova87a on 7/21/20, 4:38 PM
These petro states suffer from the curse of natural resources combined with leadership that is too busy feasting off of the intermittent boom cycle to prepare their people constructively for the bust that comes later. So you have entire countries that are basically dependent on the oil handout, and in bad times, have little industry to fall back on and wait for the next rise (or foment civil unrest).
Some of the leaders do know that they can't live on oil forever, so you see some sovereign wealth funds investing in things that their people can learn and use to build their society more resiliently. But in general the improvements are not very deep -- the money comes too easily and people get used to state intervention and not having to work.
It's a problem.
by tomcooks on 7/21/20, 5:09 PM
Rashid bin Saeed Al Maktoum, Emir of Dubai
by yumraj on 7/21/20, 5:02 PM
Argument for Lower : State sponsors, and rich individual sponsors will have fewer funds. There may be local revolutions resulting in more democratic governments.
Higher: There will be instability due to rising poverty with many people turning to radicalization and in many cases terrorism becoming the only way for poor people to support their families.
by irrational on 7/21/20, 5:22 PM
1. Their economies will be affected as the world moves to non-oil based energy.
2. Their land will become more uninhabitable as time goes on. Higher temperatures, less water, more sandstorms, etc. I've seen studies that say the Middle East will be completely uninhabitable by the end of the century so we should expect mass migration from there to other places.
They will need money to combat number 2, but they will have less of that because of number 1.
by dghughes on 7/21/20, 6:16 PM
At least the UAE started construction when oil prices were high. I can't imagine a Gulf state starting a reactor program now with oil prices so low.
https://www.aljazeera.com/ajimpact/nuclear-gulf-experts-soun...
by 082349872349872 on 7/21/20, 4:48 PM
by tijuco2 on 7/21/20, 4:50 PM
by quickthrowman on 7/21/20, 4:30 PM
by motohagiography on 7/21/20, 5:23 PM
Basic issue is that when a government can fund itself using resource extraction, it does not need the consent of a nation of people who would otherwise make up a tax base, so they pay the army and police out of oil money to keep them in power, and the average citizen is reduced to a subject. Trouble is, if all you need for power is control of the resources, it's not like you need to spend on winning hearts and minds when you can seize the resources with a relatively small rebel group. Given the high stakes of oil/resource billions and the very low bar to entry for cheap rebellions to seize them, these incentives are a recipe for the political shit shows we tend to associate with some resource cursed economies.
The predictable effect of oil price collapse is that leaders can no longer guarantee those payouts to the people who keep them in power, and as a result, those people will replace them with someone who can keep paying them. This is described in the DeMesquita-based idea of the "Rules for Rulers" video (https://youtu.be/rStL7niR7gs), which is related to the article's closing line about leaders getting their peoples consent.
The "Arab World," is a diverse place with a variety of multilateral interests so there are more dimensions to the outcomes than this, but the most obvious risk is that China will prop up whoever they can control in exchange for oil, and the mid-east will become the field for an China/US proxy war. The next risk is that unfortunately, if Arab leaders are reduced to winning hearts and minds to stay in power, they may do it with appeals to religious radicalism instead of democracy, which will bring about another era of state sponsored terrorism, that again, invites war.
Nice that we're using less oil which is good for the planet, but there is the small matter in the interim of what is good for humanity. The people who lose in these conflicts are never the participants, but the ones caught between them. These people will form new waves of refugees from the conflicts that can bring additional instability.
The precise knock-on effects of an oil price collapse can't be predicted, but you can anticipate the change in downstream volatility, and find a way to become indispensable in volatile times.
by opportune on 7/21/20, 4:34 PM
by chiefalchemist on 7/21/20, 5:06 PM
The benefit then was it hurt Russia, Venezuela, and Iran. The pamademic has taken it a step further. I guess the question is: can the USA bail out SA and associates? Does the US have the political will and the capital to do so? If not, then what?
p.s. Keep in mind the first foreign country the current POTUS visited was SA. It seemed like an odd choice. Maybe not?
by darth_avocado on 7/21/20, 6:40 PM
by lizknope on 7/21/20, 5:43 PM
https://en.wikipedia.org/wiki/Economy_of_Dubai
Oil production, which once accounted for 50 percent of Dubai's gross domestic product, contributes less than 1 percent to GDP today.
by cameldrv on 7/21/20, 6:41 PM
When oil crashed in the mid eighties, the Soviets were forced to look for hard currency loans from the west to keep up food imports. These loans were then tacitly conditioned on the Soviets behaving themselves in Eastern Europe. When the Solidarity protests started up in Poland and the Monday demonstrations started in East Germany, the normal Soviet response (as in 1956 and 1968) to roll tanks was not an option, because it would have meant no more loans, no more grain, and the starvation of the Soviet population.
by LockAndLol on 7/21/20, 7:20 PM
by LukeEF on 7/21/20, 4:35 PM
by neonate on 7/21/20, 5:38 PM
by staycoolboy on 7/21/20, 5:00 PM
https://www.cnbc.com/2018/03/27/softbank-and-saudi-arabia-an...
by BurningFrog on 7/21/20, 5:52 PM
If that unearned funding source dies out, I think it can only be good for human freedom and, at least longer term, peace.
by Pokepokalypse on 7/21/20, 4:55 PM
by alextheparrot on 7/21/20, 6:11 PM
I could only read to this point due to the paywall, but US sanctions halved Iranian oil exports from 2017 -> 2019 [0] as well. Goes to show the significance of the sanctions.
by adamc on 7/21/20, 5:09 PM
by djsumdog on 7/21/20, 4:42 PM
Even if you use the fast growing forests used for paper in places like Oregon, there is still petroleum used in planting, cutting and fertilizing biofuel forests. In many ways, it's even worse for the environment than just burning the oil directly.
Baring some massive breakthrough in fusion, society as a whole needs to consume less energy, purchase less stuff and make durable goods that last a lot longer (a cellphone should last 8 years, not 3). Mass consumption is going to kill our environment a lot faster than energy consumption or CO2 emissions. CO2 pales in comparison to the ecological devastation in Chinese factory cities, the large amount of plastic particulates/trash in our oceans and completely unsustainable economic doctrine of infinite growth.