Hacker News Reader

Comment by vvvv | Hacker News Reader

That is exactly the control mechanism that was used by a number of Arab countries, including Saudi Arabia, to prevent the Arab Spring revolutions from happening within their borders. They handed out billions of cash to the populace.

"...the Saudi state began spending $130 billion to pump up civil servant salaries (paying two extra months’ salaries)"

"In Kuwait, at around the same time, the state increased civil servant salaries by 115 percent at a cost of more than $1 billion, and at an additional cost of $5 billion, gave a cash handout of Kuwaiti Dinar (KD) 1000 to its citizens and promised free distribution of foodstuffs for fourteen months"

http://www18.georgetown.edu/data/people/mk556/publication-61...

View on HN

What will become of the already unstable Middle East when oil begins its inevitable (likely slow) decline as a dominant power source?

My guess? Not much.

Seems like they would find some other investments to make in the meantime.

Look at the state of the Middle East between the rise of sea-borne trade that withered the old overland Silk Road trade routes and the current petro-states.

Most of the oil-rich nations have reasonably large sovereign wealth funds, so they have broad investment exposure to the rest of the global economy. I think the plan is to draw on those as necessary to transition their economies into something more diversified and sustainable.

And it looks (at least in Saudi Arabia's case) that they were trying to diversify towards renewables in a vast way [0], although my google search also turned up more recent articles indicating they're pushing that back [1]. The thing about the Saudi Arabian royal family is that they're all guaranteed allowances and the family grows at a near exponential rate since they all have multiple wives. I couldn't find any good sources on numbers but in a book about Saudi Arabia by former CIA operative Robert Baer "Sleeping with the Devil: How the US Sold it's Soul for Saudi Crude" [3] [4] I believe he estimated the current number to be about 60,000 (Wikipedia estimates 15,000 so I may be remembering that wrong [5]), aka an unsustainable population growth in royal family members.

[0] - http://www.arabnews.com/news/458342 [1] - http://www.renewableenergyworld.com/news/2015/01/saudi-arabi... [3] - http://www.amazon.com/Sleeping-Devil-Washington-Saudi-Crude/... [4] - (heartily recommended, although because most of these things are classified, truly it is his word. In his other book about Iran, his conclusion was to bring Iran to the playing table and recognize them as a regional and world power, so it doesn't seem to follow a strictly American narrative, and in my opinion, gives him a bit of credence. Others may beg to differ, I'm not sure.) [5] - https://en.wikipedia.org/wiki/House_of_Saud

Renewables are great, but I'm not sure they would be able to support an entire economy. One of the few great things about fossil fuels and specifically oil is that it is a power source that can be stored in a dense and stable form. Renewables can't really be stored in this manner and therefore can't easily be exported beyond reasonably short distances. Saudi Arabia therefore can't rely on selling renewable energy to the USA, China, and the EU to support their economy like they do with oil.

Oil can be synthesized; to the extent it has desirable traits as an energy transport medium, that doesn't mean it has to be the root energy source.

I was thinking more become a key developer of solar panels and export the panels themselves (or wind turbine blades, geothermal pipes, etc (off the cuff examples, I don't know if they have use or desire for blades or pipes)).

I believe he wrote a long Atlantic article based on the book - 'The Fall of the House of Saud'

The Fall of the House of Saud

The Atlantic. May 2003 http://www.theatlantic.com/magazine/archive/2003/05/the-fall...

"A former CIA operative argues, in an article drawn form his new book, Sleeping With the Devil, that today's Saudi Arabia can't last much longer—and the social and economic fallout of its demise could be calamitous.

Five extended families in the Middle East own about 60 percent of the world's oil.

The Saud family, which rules Saudi Arabia, controls more than a third of that amount.

In the air in Riyadh and Jidda is the conviction that oil money has corrupted the ruling family beyond redemption, even as the general population has grown and gotten poorer; that the country's leaders have failed to protect fellow Muslims in Palestine and elsewhere; and that the House of Saud has let Islam be humiliated—that, in short, the country needs a radical "purification."

Alternatively, the royals will just loot the sovereign wealth fund and flee the country.

Sovereign wealth funds in third-world countries don't tend to last long. Nauru would still be one if the richest countries on Earth except that the sovereign wealth fund somehow found its way into the pockets of the people tasked with looking after the sovereign wealth fund.

I also thought of Nauru. Seems the island center is chewed-up former phosphate mines and the islanders have nothing to show for it. Australia briefly (?) tried to relocate some unwanted refugees there. Not much to say for the place anymore.

They may actually emerge as a leader in green energy & architecture. Masdar City looks like an interesting project to follow.

If anything, they'll get richer, as oil is not exactly an elastic good. As supply dries up, demand won't, so price will have to compensate, and barring some form of extra-market intervention, it will probably mean a higher margin for the suppliers.

Probably what already happened to Egypt and Syria when their oil production dropped.

Reply on news.ycombinator.com