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

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

#91

Post by Mvandenbergh » Tue, Jul 21, 2020, 5:39 PM UTC

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…

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

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

#92

Post by hinkley » Tue, Jul 21, 2020, 5:40 PM UTC

ogre_codes wrote: post #46

guepe wrote: post #37

Earlier quoted context omitted.

Prices have dropped more frequently because of US shale oil. Electrification is a very small factor (yet).

Fair enough on all points. Electrification is the longer term existential threat. Even if 20% of vehicles are electric, the impact on demand and oil prices will be profound.

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 made an enemy of your customers. They just might know it yet. Lots of them will be working in an uncoordinated fashion to make their bad news a little better, making your good news worse and worse.

Once word gets around they'll start teaming up.

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

#93

Post by saalweachter » Tue, Jul 21, 2020, 5:42 PM UTC

ogre_codes wrote: post #46

guepe wrote: post #37

Earlier quoted context omitted.

Prices have dropped more frequently because of US shale oil. Electrification is a very small factor (yet).

Fair enough on all points. Electrification is the longer term existential threat. Even if 20% of vehicles are electric, the impact on demand and oil prices will be profound.

Eventually New England will also have to outlaw the use of #2 heating oil.

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

#94

Post by eloff » Tue, Jul 21, 2020, 5:42 PM UTC

andi999 wrote: post #67

eloff wrote: post #33

Earlier quoted context omitted.

Biofuel is a small industry. But the big difference is it's carbon neutral because the carbon released into the atmosphere came from the atmosphere. Oil is releasing carbon from prehistoric atmospheres.

Actually it is tax neutral, not carbon neutral. The kicker here is (i cant find the source anymore) at least in Germany agriculture is energy intensive. It seems one energy unit of crop need one energie unit of (tax excempted) fossil fuel (for the machineries). So basically you are pumping fuel into a black box, and out comes bioful (which has tax breaks as well, if I remember correctly) It is a left picket right poc…

That's true, one must also account for the carbon footprint of the inputs. Of course oil extraction and refining also has a carbon footprint.

It's a problem that could be solved over time if using green energy for the agriculture.

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

#95

Post by coliveira » Tue, Jul 21, 2020, 5:42 PM UTC

pydry wrote: post #26

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's not strictly a "wrong leaders" problem. It's much more systemic than that. Elect a good leader and the oil will provide the impetus to tear that leader down. Industry also won't form because of Dutch disease. Who wants to build a factory in Saudi Arabia even if it weren't unstable? Everything just costs too much because of the oil - land, materials, labor. Sovereign wealth funds also don't really solve the probl…

> vulnerable to confiscation from foreign governments if they decide they don't like your face

This should be a sign that the rule of law is in decline all over the world. What UK did and the US is doing is completely absurd, even when dealing with an authoritarian regime. Not only UK is holding gold that is not owned by them, but it is giving that gold to a pirate designated by the US.

And this is bad not just for the particular case, but it may also be used as precedent for similar illegal actions against other governments that don't subscribe to the US gospel.

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

#96

Post by lizknope » Tue, Jul 21, 2020, 5:43 PM UTC

I'm not going to defend Dubai but regarding oil being dominant to the economy.

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.

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

#97

Post by hnarn » Tue, Jul 21, 2020, 5:43 PM UTC

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.

I question how realistic it is for Saudi Arabia to turn into anything like the "tech hub" or "international finance center" or whatever of the area while simultaneously being an Islamist, conservative theocracy that is in many ways still judicially medieval.

Even if they pull it off, many people will think twice about coming there. Corruption, bigotry and a close-minded view of the world needs to go first.

Look at a country like Singapore: does anyone believe that they would be where they are today if they were an authoritarian regime that executed homosexuals and ordered the murder and dismemberment of dissidents abroad?

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

#98

Post by eternalban » Tue, Jul 21, 2020, 5:43 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…

Oil money comes with strings attached and to completely ignore this in your analysis seems either uninformed or disingenuous.

So called Petro Dollars, for example, can't be just spent on anything. It is so difficult to dig up information on this (which was US state secret for a while btw) but iirc KSA must at least spend a portion of "their" Dollars on US treasuries. Another portion of "their" Dollars must go to US arms manufacturers. In return, US backed (formerly UK backed) Saud family gets to play King in Arabia.

So that "leadership that is too busy feating off" is aka Puppets of Western imperial colonials cum American hegemon's vassals. Any efforts by locals to denude themselves of the said "leadership" is not looked upon kindly by the "interantional community".

> the oil handout

That's cute!

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

#99

Post by hnarn » Tue, Jul 21, 2020, 5:44 PM UTC

natch wrote: post #8

frankbreetz wrote: post #6

Earlier quoted context omitted.

It is easy to feel bad for the citizens who don't really get a say in the matter and live under a repressive regime.

I feel worse for the non-citizens they effectively enslave in their households, controlling their passport while under employment.

Two things can be bad at once.

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

#100

Post by pydry » Tue, Jul 21, 2020, 5:45 PM UTC

Svip wrote: post #54

pydry wrote: post #26

Earlier quoted context omitted.

It's not strictly a "wrong leaders" problem. It's much more systemic than that. Elect a good leader and the oil will provide the impetus to tear that leader down. Industry also won't form because of Dutch disease. Who wants to build a factory in Saudi Arabia even if it weren't unstable? Everything just costs too much because of the oil - land, materials, labor. Sovereign wealth funds also don't really solve the probl…

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 proves it's possible. However, without a second clear example it's difficult to prove exactly what it is about Norway that makes it possible. Is it culture? Wealth? The timing? Sheer good luck in governance? A combination? It's hard to tell.

The far right frequently claim it's something to do with a lack of colored immigrants, for instance.