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With oil cheap, Arab states cannot balance their books

economist.com

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

#81

Post by dingoegret »

jeffreyrogers wrote: post #42
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,…

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…

Even renewables need tons of fossil to lubricate moving parts. Generators in a turbine alone is a massive oil guzzler. The world will always need oil until a synthetic lubricant that isn't insanely cost prohibitive.

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

#82

Post by jdhawk »

mancerayder wrote: post #73
samstave wrote: post #64

Earlier quoted context omitted.

I recall that quote. Sadly, while prescient that quote is - he still is (has?) done nothing to mitigate its reality?

Dubai, as far as I've heard, has no oil left. It's tourism, finance and other industries unrelated. So in that sense haven't they?

and shipping, so much shipping

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

#83

Post by monocasa »

drocer88 wrote: post #65
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,…

"The point here is that sub $40 oil is becoming the new norm" Crude is currently $41.74 as of 1:10PM EDT.

Which is the highest WTI crude has been in months.

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

#84

Post by rhizome »

supernova87a wrote: post #22
nickfromseattle wrote: post #18

Earlier quoted context omitted.

>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...

Is that investment just finding a place to park money? Or does it do something good for the every day Saudi citizen? I don't follow the issue closely enough to know.

Following the list of Softbank "successes" seems like a decent proxy.

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

#85

Post by duxup »

cmrdporcupine wrote: post #32
Pokepokalypse wrote: post #24

then. . . why did the Arab states (Saudi Arabia) join with Russia to overproduce and sandbag prices?

To bankrupt and slow down other oil producing countries that have even higher costs. As an example, take a look at Alberta, Canada, with its giant oil sands projects -- on the world's largest deposit of crude oil on the planet -- basically unprofitable now.

I think that is true to an extent, as far as international politics goes. Saudi Arabia is happy to make that move to target say Iran, etc.

But things like oil sands and etc won't go away. It's accessible and the boom and bust nature of oil is just part of the system. They don't really stop oil sands.. just pause them.

Someone goes bankrupt today, someone else will sell that oil when the price goes back up. And if the price never goes back up then even Saudi Arabia is in trouble...

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

#86

Post by Apocryphon »

yardie wrote: post #78
tijuco2 wrote: post #17

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.

One of those English speaking cities is Neom [0]. I think they want to build it into a tech/tourist planned city. The Mediterranean and South East Asia is littered with these futuristic planned cities. I was anchored off the coast of Malta near this KSA financed "Smart City" [1] [0] https://www.businessinsider.com/neom-what-we-know-saudi-arab... [1] http://smartcitymalta.com.mt

Unfortunately, tourism is the one major industry that is a non-starter right now.

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

#87

Post by hnarn »

yumraj wrote: post #38

One of the things I've always wondered about when Arab countries run out of oil, and now with cheap oil, will it, at a macro level, result in lower Islamic terrorism or higher? 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…

It all comes down to how you ask the question. If you ask the question like this instead, the outcome is in my opinion slightly less up for interpretation:

Q: "What happens when a badly governed country, already ripe with corruption and tendencies of sectarianism and local warlords, loses its only real source of income and the economy collapses?"

> There may be local revolutions resulting in more democratic governments.

If we are to entertain this hypothesis, why has this not happened already in the general area? There have been plenty of chances, not only in the Middle East but also in war-torn countries in Africa. The answer in my mind is that armed forces are already concentrated in the hands of the corrupt, and in an environment where surplus is a generation away, power will corrupt the uncorrupted.

When state power collapses, the economy grinds to a halt and the most basic necessities of life can no longer be counted on, in a country that also already has armed para-military groups and tendencies toward sectarianism and warlord leadership, the outcome is predictable: it's civil war, and untold suffering.

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

#88

Post by leoh »

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…

Well, it's more severe now and as you pointed out yourself, it's becoming increasingly common. Not to mention a shift to renewables (despite some developing countries continuing to rely on oil), which may add increasing pressure.

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

#90

Post by rhizome »

Alex3917 wrote: post #27
awillen wrote: post #20

Earlier quoted context omitted.

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 w…

> International flights from the US are looking to basically be nonexistent until there's a vaccine. But there's likely going to be a vaccine in less than a year. It will take several years to know to what extent it's really safe or effective, but people who travel a lot for business can get it right away if they want.

"Likely" based on what? And does an unsafe vaccine (whatever that could be) really qualify as a vaccine? What would make it something a person who travels a lot for business would want to risk?
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