In this thread here, a number of people express the view that as soon as The West no longer needs oil, various Middle Eastern countries will find themselves up a certain creek with no fuel for the outboard, so to speak.
How likely is this, really? I mean, let’s say that BP or Shell or someone else entirely comes out next week and says “We’ve invented an alternative source of fuel that is cheap, readily made/renewable, not bad for the environment, and just as good as petrol”. Whilst we’ll all be happy to see a return to the days of fuel costing 50c a litre, I can’t imagine that the Saudi Arabian economy is going to collapse a week after the first Super Cheap Alternative Miracle Fuel vehicles roll off the assembly lines just because none of the Western countries want oil anymore.
But then the thought occurs that, until the end of WWI, Saudi Arabia was a backwater part of the Ottoman Empire for the simple reason that, besides Mecca and Medina, there’s fuck all there except sand and oil.
You’d assume that the Saudi Government is already looking at diversifying its economy so that when the oil finally runs out or is no longer needed, they don’t suddenly collapse into civil war or end up like the Congo.
Anyway, what is likely to happen to countries like Saudi Arabia when oil is no longer needed and we’re all driving electric cars, flying in hydrogen fuell cell powered aircraft, and so on?
It seems to me like many oil producing nations are sufficiently diversified (or will be) so that they can deal with the transition. Since such changes won’t happen overnight, and will likely coincide with rising oil revenues, I think most will be able to whether the storm if they are under sound management. If any of them completely fail, it will more likely be due to political and religious turmoil stifling their economy and dissuading outside investment, as opposed to alternative fuels.
That’s incorrect. Oil is a finite resource, and the Saudis have pumped out quite a lot of it, and world energy demand is going up. Sooner or later, probably sooner, the transition to alternative energy will be complete for the simple reason that the oil will be gone, or too rare to burn. The oil companies can fight it all they like; if they succeed, all it means is that the countries they succeed in collapse, as do they. And well before the oil is all gone, it won’t be the cheapest fuel source anymore.
The Saudis don’t have a magic Well of Infinite Oil. They will, sooner or later, run out. As for what will happen in the ME, I expect it to vary from country to country, but I expect revolution and general disaster in Saudi Arabia. The fundies are too powerful, there’s too little else there, too much has been squandered.
Persia has been a significant economic power since antiquity. It’s nicely central for all of Europe, Africa, and Asia.
But petrol is simply a mix of organic chemicals, and I imagine that significant effort is being put to create those chemicals artificially at low cost. Whoever cracks that will become immensely rich.
Whatever happens, I don’t think the transition will happen overnight because:
Oil will peak, not run out
All our infrastructure is set up for oil
OPEC and others set their prices based on demand. Cheap alternative = lower price and they’ll still be exporting as much as they can extract (OK, making less money in the process, but my point is simply that it will be a slow transition, rather than the world calling up one day and saying “Hey Saudis…keep ya stinkin’ oil!”.
So the oil exporters will have time to diversify. There’s not much evidence that they will though, although the UAE has made a commendable effort to do this (commendable apart from the human rights issues, with how they treat their labour).
You have to remember that the Saudis are HEAVILY invested in the general U.S. economy, and probably the economies of many other countries. So only if the U.S. economy should fall would there be a chance of revolution in SA.
Maybe they’ll start driving Toyotas instead of Mercedes. Yeah, there’s not much besides oil in Saudi Arabia, but there’s a lot in those Swiss bank accounts.