Why the current oil boom for Arab states may be their last


The Gulf states went through an oil boom in the 1970s and 1980s, and again in the early 2000s. But that is changing. Attitude towards energy consumption Experts say this means that such cycles may no longer be viable, and Gulf states need to be prepared.

“This is definitely the beginning of the end of oil wealth at this sustainable level,” said Karen Young, senior research scholar at Columbia’s Center on Global Energy Policy.

“Today’s boom is different in that it’s longer than the oil crisis,” Young said. “This is a major structural change in how we meet global energy needs.”

Middle Eastern energy exporters are expected to benefit. $1.3 trillion in hydrocarbon revenue The International Monetary Fund has said that in four years as a result of the current boom. Experts have cautioned against wasting it, saying Gulf states could use the windfall to diversify their economies away from oil wealth to insulate themselves from oil price volatility. need of
During the previous oil boom, the Gulf states were seen squandering their wealth on wasteful and inefficient investments, including arms purchases. Handout to citizens. These booms were followed by downturns as oil prices cooled as nations continued to rely on hydrocarbons for their revenues.

“Oftentimes construction projects are started and then abandoned when the oil money runs out,” said Alan Wald, a nonresident senior fellow at the Atlantic Council in Washington, D.C., because they have There’s a lot to spend there, often not much oversight, and there’s traditionally been a lot of corruption.”

According to Omar Al-Abedli, director of research at the Bahrain-based Darsat think tank, there has traditionally been a heavy emphasis on increasing public sector jobs and increasing public sector salaries through bonuses or increases.

Oh World Bank May 2022 Report Stressed that Gulf countries should invest the wealth gained after the pandemic and the war in Ukraine into the bloc’s “economic and environmental transition”.

Focusing on investing in the energy transition is critical as many parts of the world accelerate the transition to renewable energy, the report says.

Gulf states are working on diversification. Since the last oil boom that ended in 2014, four of the six Gulf states have introduced a value-added tax and the United Arab Emirates has one. Corporate income levy. None of the Gulf states have income tax. Saudi Arabia is investing in non-oil sectors such as tourism, but experts have expressed doubts about the sector’s ability to offset oil revenues. The kingdom earns about $1 billion a day from oil at current prices.

Gulf states have pushed back against the notion that hydrocarbons could be phased out as a primary energy source as environmentally conscious nations turn to alternative sources. He says that oil is and will remain important to the world economy.

Critics say it is in the interest of oil exporters to push that narrative, but oil states have pointed to a surge in crude demand that has come with the lifting of Covid-19 restrictions around the world.

Paris-based International Energy Agency said last week That oil demand is set to grow sharply next year, driven by job recovery in China and global travel.

The United Arab Emirates, one of the world’s biggest oil exporters, has warned that a too-rapid transition away from hydrocarbons could trigger an economic crisis.

“Policies that aim to phase out hydrocarbons too quickly, without adequate viable alternatives, are self-defeating,” wrote Sultan Al Jaber, the UAE’s special envoy for climate change. In August’s opinion. “They will undermine energy security, undermine economic stability, and leave less revenue to invest in the energy transition,” he added.

Even if economies move away from oil as an energy source, demand for oil-based products such as petrochemicals and plastic materials will remain, said Young of Columbia’s Center on Global Energy Policy.

Still, experts say the Gulf states realize that despite continued growth in oil demand, such increases in oil prices may not happen again at the same degree or frequency.

“There is a clear sense that this is a temporary boom, and that this may represent the last sustained increase in oil prices,” Al-Abedli said. “Governments and people alike feel that this is an opportunity that should be taken full advantage of, rather than let go by poor decision-making.”

Digest

Iranian woman Morality fell into a coma while in police custody and died.

Oh A 22-year-old Iranian woman died. After he was arrested by Iran’s morality police earlier this week, Iran’s semi-official Etemad online website reported, citing his uncle. The woman’s death sparked outrage on social media platforms, prompting local and Western authorities to react.
  • background: On Tuesday evening, Mahsa Amini and her family, who had traveled from Iran’s Kurdistan region to visit relatives in the capital Tehran, were stopped by a patrol of the Morality Police – a unit that enforces strict dress codes for women. Enforces the code. According to Iran Wire, human rights activists who have spoken to the family say the police grabbed Amini and forced her into a police car. On Thursday, Tehran police said Amini had suffered a “heart attack”. Iranian officials said on Saturday that an autopsy had been conducted and the results would be announced after expert examination.
  • Why this is important: The incident sparked outrage around the world, with many taking to social media using the hashtag #MahsaAmini in English and Farsi to denounce Iran’s morality police and the country’s strict hijab laws for assaulting women. protested to face. This also follows recent social media protests against the “National Day of Hijab and Chastity” in Tehran.

Erdogan wants Turkey to join the Shanghai Cooperation Organization.

Turkish broadcaster NTV and other media reported on Saturday that President Recep Tayyip Erdogan said he targeted NATO member Turkey’s membership of the Shanghai Cooperation Organization (SCO). have been. He was speaking to reporters after attending the Shanghai Cooperation Organization summit in Uzbekistan. “Our relations with these countries will go into a very different position with this step,” Erdogan said. Asked if he meant membership of the Shanghai Cooperation Organization, he said that was certainly the goal.

  • background: Turkey is currently a dialogue partner of the Shanghai Cooperation Organization, an economic, political and security group whose members include China, Russia, India, Pakistan, Iran, Kyrgyzstan, Tajikistan, Kazakhstan and Uzbekistan.
  • Why this is important: Joining the Shanghai Cooperation Organization would bring Ankara closer to Russia and China as the war in Ukraine polarizes global politics. NATO member Turkey has maintained good relations with Russia through the war and has avoided supporting its Western allies in imposing sanctions on the country.

Photos show Iran’s leader at the event amid reports of ill health.

Photos and a video published on Iran’s official websites and state media show the country’s Supreme Leader Ayatollah Seyyed Ali Khamenei attending an Arbaeen mourning ceremony at a mosque in Tehran, which commemorates the Prophet of Islam. At the end of the 40-day period for mourning the murder of one of them. A day after news of the deteriorating health of Muhammad’s grandson, the Ayatollah.

  • background: The New York Times reported on Friday that Khamenei canceled all public appearances last week after becoming “gravely ill” and was being monitored by a team of doctors. Citing four anonymous people familiar with his health, the NYT said Khamenei was on bed rest last week after undergoing surgery for an intestinal obstruction.
  • Why it matters: Khamenei has been Iran’s leader for the past three decades and is one of the longest-serving rulers in the Middle East. It is not yet clear who might succeed the leader, but it is expected that in the event of his death, an assembly of experts will convene to discuss his successor.

What to see

Queen Rania of Jordan spoke to CNN’s Becky Anderson about the advice given to her by the late British Queen Elizabeth II, saying it still sticks with her today.

Watch the interview here:

Around the area

Ines Laclaich of Morocco tees off on the 7th hole during the first day of the Aramco Team Series London on June 16, 2022 in St. Albans, England.
Rookie professional golfer Innes Laclais He became the first Arab. And she became the first North African woman to win a Ladies European Tour title when she won the Lacoste Ladies Open de France on Saturday.

The 24-year-old Casablanca native defeated English golfer Meghan McLaren in a playoff on Saturday, and said her Ladies Open de France win will be something she will remember “for the rest of my life”. will hold, as he celebrates his historic win. at Deauville with her husband Ali who is also her caddy.

“It feels amazing,” Laklalac said, the Ladies European Tour website reported. “It’s special to hear. I don’t have words to describe it.”

He added that “Morocco is doing a great job promoting golf” and that “a Moroccan win on a major tour would be huge for the country and the Arab world in general.”

Laklich also said she is a big fan of Tunisian tennis star Ones Jabior, who became the first African woman to play in a Grand Slam final this year when she reached the finals at Wimbledon and the US Open.

By Amy Lewis

Today’s picture

Environmental volunteers "World Cleanliness Day" But as part of an event to raise awareness about pollution, they are building a pyramid made of plastic waste collected from the Nile River.  Saturday in the Giza region of Egypt near the capital Cairo.

This article has been updated to correct Karen Young’s designation.



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