10 Responses to OPEC’s $1 Trillion Cash Quiets Poor Thanks to Oil Above $100 for Longest Period Ever
Money can’t buy you love. But oil money can certainly quell civil unrest that is rocking those countries in the region that don’t have it, Bloomberg reports.
Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.
Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever. They are promising to plow record amounts into public and social programs after pro-democracy movements overthrew rulers in Tunisia, Egypt and Libya and spread to Yemen and Syria.
“Global Food Prices Stuck Near Record High Levels,” As Climate Progress reported over the weekend. And many leading experts have pointed out that high food prices are a primary driver of political instability (see Expert consensus grows on contribution of record high food prices to Middle East unrest).
But thanks to those fossil-fuel-funded anti-science ideologues who have blocked the nation and the world from embracing a rapid transition off fossil fuels, the oil rich just get richer. And that buys a lot of relief from political unrest and potential democratization:
Unlike past booms, when Abu Dhabi bought English soccer club Manchester City and Qatar acquired a stake in luxury carmaker Porsche SE, Gulf nations pledged $150 billion in additional spending this year on their citizens. They will need to keep U.S. benchmark West Texas Intermediate crude oil at more than $80 a barrel to afford their promises, according to Bank of America Corp.
“A sharp increase in spending to accommodate social pressures has averted potential disquiet over governance in most countries, though in the longer-term economic reforms will be needed to buoy private-sector growth and job creation,” Jean- Michel Saliba, a London-based economist at Bank of America, said in an e-mail Sept. 8. “Without the social spending, Gulf protests would possibly move the nations toward constitutional monarchy.”
So the Saudis and others in OPEC need high oil prices to keep their undemocratic regimes in power. Thank you Big Oil, thank you anti-clean-energy conservatives.
“Saudi Arabia will cut back after its summer surge,” said Leo Drollas, London-based chief economist at the Centre for Global Energy Studies, the researcher founded by former Saudi Oil Minister Zaki Yamani. “If it doesn’t trim now then prices might lurch downwards on lower demand, and it needs a minimum basket price of $90 for what it wants to do this year.”
Oil in New York has dropped 25 percent since its April 29 high of $113.93 on concern demand will fall as Europe grapples with its debt crisis and unemployment in the U.S. hovers at 9 percent….
The OPEC basket will stay above $100 a barrel for the rest of this year, according to forecasts from five banks and consultants, including Barclays Plc and Sanford C. Bernstein & Co. Its previous record period above this level was from April 7 to Sept. 8, 2008. OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Ironically, global warming will hit many of those countries very hard. But at least for a while, they will be able to buy their way out of it.
Reuters has a good piece, “Saudi Arabia’s water needs eating into oil wealth“:
… the leading oil exporter’s water challenges are growing as energy-intensive desalination erodes oil revenues while peak water looms more ominously than peak oil — the theory that supplies are at or near their limit, with nowhere to go but down.
Water use in the desert kingdom is already almost double the per capita global average and increasing at an ever faster rate with the rapid expansion of Saudi Arabia’s population and industrial development.
Riyadh in 2008 abandoned what was in retrospect clearly a flawed plan to achieve self-sufficiency in wheat and aims to be 100 percent reliant on imports by 2016.
Global warming is only going to make the water issue more problematic for countries in the region — but hey, the OPEC nations can just sell some more fossil fuels….