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

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

#131

Post by giantrobot » Tue, Jul 21, 2020, 6:25 PM UTC

Mvandenbergh wrote: post #91

jeffreyrogers wrote: post #42

Earlier quoted context omitted.

As they say in the oil industry: the cure for low oil prices is low oil prices. In any case, if the developing world is really to develop as much as hoped for and claimed they will need a lot of oil. Even if it is all renewables based (which is a fantasy) those renewables require large oil inputs to be manufactured (those 400 ton mining trucks won't be electrified anytime soon). So while I expect oil to be down over…

Mining trucks are easily electrified. Long distance transport is the challenge.

Trains would like to have a word.

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

#132

Post by tomjen3 » Tue, Jul 21, 2020, 6:28 PM UTC

Pokepokalypse wrote: post #43

pydry wrote: post #11

Earlier quoted context omitted.

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).

Oil would only have been a thing maybe after 1890's or so. It's been violent and reactionary for centuries. The natural resource that drove the Romans and Greeks, and later Europe to colonize that region was: trade routes. Frankly; Turkey, Persia, and Egypt have also been at each other's throats over regional dominance for centuries.

Egypt fought the Europeans. Egypt fought the Romans. Egypt fought the Asyrian Empire.

The middle-east has been a powerhouse since before Europe was a thing. They have been fighting each other for tens of millenniums.

I don't think oil was that big a factor before WWI though. You have to remember that until cars come along the entire industrial revolution is powered by coal and the UK had plenty of coal. Oil only becomes important after the first world war -- at the same time the Ottoman Empire that had ruled most of the middle-east is broken up, so you have a bunch of new countries with new civil infrastructure getting massively wealthy from a seemingly endless gift from the group - and all of those countries are ruled by tribal people and strongmen, if only because they were set up that way by the British and French.

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

#133

Post by GillBates666 » Tue, Jul 21, 2020, 6:29 PM UTC

margalabargala wrote: post #71

jeffreyrogers wrote: post #42

Earlier quoted context omitted.

As they say in the oil industry: the cure for low oil prices is low oil prices. In any case, if the developing world is really to develop as much as hoped for and claimed they will need a lot of oil. Even if it is all renewables based (which is a fantasy) those renewables require large oil inputs to be manufactured (those 400 ton mining trucks won't be electrified anytime soon). So while I expect oil to be down over…

The heavy trucks used in the mining industry are almost entirely electric. If a truck is going underground, much better for it to not be spitting fumes that will kill your workers, and if the mine is at the top of a hill, the regenerative braking from a loaded truck going downhill will charge the batteries so much that the trucks rarely, if ever, have to be manually charged. Some of the trucks in question: https://ww…

Thanks for the comment. I took the previous poster's comment at face value (seemed like common sense). My internal db has been updated.

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

#134

Post by bluGill » Tue, Jul 21, 2020, 6:30 PM UTC

ogre_codes wrote: post #111

hinkley wrote: post #92

Earlier quoted context omitted.

You might sum it up as: These countries weather boom/bust cycles in oil prices, waiting for a 'someday' to refill their coffers, and every year there are more and more things trying to put off 'someday' a little longer. Essentially these countries have an antagonistic relationship with the rest of the world, as do quite a few corporations really. If you only get good news when everyone else gets bad news, then you've…

> Once word gets around they'll start teaming up. They were able to do this fairly successfully until shale oil and spoiled their intermittently successful collusion.

They were only able to do it because Saudi Arriba was willing to take almost all of the cuts required. In the 1970s opec vot better compliance, but cartels tend to fail because it is the benifit of the individual to defect while everyone else makes cuts. Saudi Arriba is not able to make deep enough cuts alone though, and it is hard to see anyone else making them.

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

#135

Post by xoa » Tue, Jul 21, 2020, 6:31 PM UTC

vbezhenar wrote: post #105

ogre_codes wrote: post #28

Earlier quoted context omitted.

> I mean, this happened just a few years ago back in 2015, right? And 2008, and 2001, and 1998 The point here is that sub $40 oil is becoming the new norm. While these countries can weather a 2-3 year drop in oil prices, those short term drops are more and more frequent and the bottom keeps getting lower. Between electrification of transportation and reduced travel which may last for another 6 months (or much longer,…

I don't think it's about demand. If oil price were regulated as a honest market, it would cost much lower. Oil price is regulated by OPEC cartel. They could make it $200 if they want. I think that they're manipulating price low enough to slow development of non-oil energetics as much as possible and high enough to stay profitable. Also they're interested to put a pressure on Russia and some other countries, because R…

>If oil price were regulated as a honest market, it would cost much lower.

No, if oil was regulated as an honest market, it'd have the CO2 externality priced in to make it carbon neutral. That'd make the price significantly higher.

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

#136

Post by qwytw » Tue, Jul 21, 2020, 6:31 PM UTC

dgut wrote: post #68

Svip wrote: post #54

Earlier quoted context omitted.

Norway kind of proves it is possible to make it work without the corruption. But Norway also proves that you need to lay the groundwork for that, before you lay any actual groundwork. I am not sure if these other oil producing states could reach a level of stability as Norway.

Norway used to be a relatively poor country by Western European standards but had a functional economy before oil. Homogeneity, a staunchly hard-working and independent population, being surrounded by lutheran economies, and "bondevett", is why Norway turned out well.

That's not really true, Norway was one of the richest countries in the world long before the oil boom. In Europe it was only behind Luxembourg, Switzerland and Sweden by GDP per capita in 1960.

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

#137

Post by bluGill » Tue, Jul 21, 2020, 6:35 PM UTC

giantrobot wrote: post #131

Mvandenbergh wrote: post #91

Earlier quoted context omitted.

Mining trucks are easily electrified. Long distance transport is the challenge.

Trains would like to have a word.

Most freight is carried by diesel trains. While it is possible to use electric engines, the ecconmics don't work out and so only a minority of freight is on electric trains.

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

#138

Post by bluGill » Tue, Jul 21, 2020, 6:36 PM UTC

newacct583 wrote: post #75

jeffreyrogers wrote: post #42

Earlier quoted context omitted.

As they say in the oil industry: the cure for low oil prices is low oil prices. In any case, if the developing world is really to develop as much as hoped for and claimed they will need a lot of oil. Even if it is all renewables based (which is a fantasy) those renewables require large oil inputs to be manufactured (those 400 ton mining trucks won't be electrified anytime soon). So while I expect oil to be down over…

Mining trucks and industrial infrastructure don't really reflect the bulk of petroleum use. Something like 2/3 of the total US petroleum input goes to simple civil transportation alone. Heavy industry and core infrastructure are the last things that people interested in renewables will be fighting over. The low hanging fruit of personal vehicles and electricity generation is what's killing the middle east oil cartel.

The passenger transport market drives the others. Engine development is not easy when you need to meet modern emissions. Switch passenger cars to electric and the others won't have enough money to do the basic research needed for the next engine.

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

#139

Post by darth_avocado » Tue, Jul 21, 2020, 6:40 PM UTC

I mean, how is this different from any other industry in the world? If you have a set of exports, if someone out competes you and lowers the prices, you suffer. That is why you diversify and build other economies. These petro states made a ton of money, most of the times squeezing desperate countries and selling them oil at above market rates. Should've saved for a rainy day, because sooner or later, other countries are going to figure a way out to cut you off.

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

#140

Post by qwytw » Tue, Jul 21, 2020, 6:40 PM UTC

GordonS wrote: post #57

andi999 wrote: post #52

Earlier quoted context omitted.

A long time ago on an island far away... called Nauru, they tried to invest their wealth from their natural riches (phospor fertilizer). It didnt work out, if I remember correctly.

It's a strategy that's worked well for Norway though

However Norway was already one of the richest countries in the world before the oil boom. So there wasn't as much pressure on their government to spend that income immediately instead of investing it.