With oil cheap, Arab states cannot balance their books • Hacker News Board

Re: With oil cheap, Arab states cannot balance their books

#11

Post by pydry » Tue, Jul 21, 2020, 4:43 PM UTC

opportune wrote: post #4

It’s hard to feel bad for them but there are a lot of outcomes here which result in a lot of people dying. Pretty sure half the reason SA and friends promote violent, reactionary interpretations of Islam is to serve as a dead man’s switch in case of regime change.

Oil is basically what made the middle east a violent and reactionary place.

Natural resources dominating the economy drives conflict and economic clusterfucks in all but the richest, most stable democracies (i.e. everywhere except Norway).

Oil's decline in importance might be the only way to escape this cycle (even if it will probably lead to bloodshed first).

Re: With oil cheap, Arab states cannot balance their books

#12

Post by supernova87a » Tue, Jul 21, 2020, 4:46 PM UTC

djsumdog wrote: post #10

I feel like this might go the other direction once the lockdowns end and once people realize a huge chunk of their "green" energy labeled as biomass is actually just burning down trees. 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…

The end of your comment makes some sense. The beginning is a puzzle. Who's using biomass? It's <1.5% of energy generation in the US -- you're pretty special and living in an unusual place if you get any substantial energy from that source.

Re: With oil cheap, Arab states cannot balance their books

#13

Post by colincooke » Tue, Jul 21, 2020, 4:47 PM UTC

LukeEF wrote: post #5

The shallow pro market idealism that too often colors the Economist's analysis is hard to swallow. Give me the confidence to pronounce: 'If Arab rulers want citizens to pay their way, they will need to start earning their consent' in a complex and unstable region. As thou they can see the consequences of complex change. The ghosts of the dead in Libya, Syria and Egypt (remember that brief flame of democracy) should b…

Not exactly sure your critique (maybe I'm misunderstanding?). The gist I get from the article is that many Arab states have dependend on oil to stablize their economies/internal politics and fund their way of life, and that while some of these states had plans to diversify the current cheap oil makes the execution of that plan more complicated. In addition (something I learned from this article) the economies in the region are connected in ways which may make possibile instability amplified due to migrant workers/tourism.

The quote you picked out might not be a great take, but I think it's referring to the potential large (and growing) gap between the ruling class and normal citizens which could seed dissent.

Re: With oil cheap, Arab states cannot balance their books

#14

Post by [deleted] » Tue, Jul 21, 2020, 4:47 PM UTC

supernova87a wrote: post #9

LukeEF wrote: post #5

The shallow pro market idealism that too often colors the Economist's analysis is hard to swallow. Give me the confidence to pronounce: 'If Arab rulers want citizens to pay their way, they will need to start earning their consent' in a complex and unstable region. As thou they can see the consequences of complex change. The ghosts of the dead in Libya, Syria and Egypt (remember that brief flame of democracy) should b…

Eh, what do expect from the Economist? They write as if they just read something about the topic and now after 2 paragraphs came to the conclusion on how the world should be updated. That's their style.

[deleted]

Re: With oil cheap, Arab states cannot balance their books

#15

Post by gerbal » Tue, Jul 21, 2020, 4:48 PM UTC

djsumdog wrote: post #10

I feel like this might go the other direction once the lockdowns end and once people realize a huge chunk of their "green" energy labeled as biomass is actually just burning down trees. 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…

> In many ways, it's even worse for the environment than just burning the oil directly.

This seems like a testable claim. Is there research about this subject that could confirm or debunk this claim?

Re: With oil cheap, Arab states cannot balance their books

#16

Post by 082349872349872 » Tue, Jul 21, 2020, 4:48 PM UTC

On sorts of pain that have resulted: in 1985, Fahd opened the taps just when Gorbi was trying to reform the soviet economy. Successful reform was presumably made more difficult when one's principal export declines to a third (not helped by concurrent USD weakness) in real value.

https://en.wikipedia.org/wiki/1980s_oil_glut

Re: With oil cheap, Arab states cannot balance their books

#17

Post by tijuco2 » Tue, Jul 21, 2020, 4:50 PM UTC

I had a roommate from Saudi Arabia who said that their king have realized that a while ago and because they have basically infinite money, he started to develop small cities that have touristic potential, and people are being taught English too. In his words, they want to change this oil stereotype about their country, and that in ten years their country will be transformed.

Re: With oil cheap, Arab states cannot balance their books

#18

Post by nickfromseattle » Tue, Jul 21, 2020, 4:50 PM UTC

supernova87a wrote: post #7

I mean, this happened just a few years ago back in 2015, right? And 2008, and 2001, and 1998... 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 littl…

>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

Do the Saudi's have the experience and culture to make this work? $90B invested in Softbank Vision Fund. [0]

[0] https://www.businessinsider.com/saudi-arabia-45-billion-with...

Re: With oil cheap, Arab states cannot balance their books

#19

Post by 762236 » Tue, Jul 21, 2020, 4:53 PM UTC

gerbal wrote: post #15

djsumdog wrote: post #10

I feel like this might go the other direction once the lockdowns end and once people realize a huge chunk of their "green" energy labeled as biomass is actually just burning down trees. 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…

> In many ways, it's even worse for the environment than just burning the oil directly. This seems like a testable claim. Is there research about this subject that could confirm or debunk this claim?

It can be tested in the other direction too: is there research that can confirm or debunk the opposite claim?

Re: With oil cheap, Arab states cannot balance their books

#20

Post by awillen » Tue, Jul 21, 2020, 4:54 PM UTC

supernova87a wrote: post #7

I mean, this happened just a few years ago back in 2015, right? And 2008, and 2001, and 1998... 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 littl…

It feels like this time is different because of the ongoing lack of demand. International flights from the US are looking to basically be nonexistent until there's a vaccine. After that, it's very plausible the business travel economy won't ever recover fully.

I agree that some of the more foresighted countries are making some of the right moves (though Saudi Arabia is probably kicking itself for not moving forward with the Aramco IPO last year), but I really wonder what the effects will be on the political stability of places like Iran and Iraq - they're not in great shape to start with, and this kind of economic shock seems like about the worst possible thing to really exacerbate all the problems that exist already.