How Oil Exporters Reach Financial Collapse

6 04 2013

I wrote about Egypt’s plight recently and how much of it had to do with Peak Oil there. And population. And food. This post by Gail Tverberg extends on this much better than I can, and I guess it’s only a matter of time before much of the Middle Eastern oil exporters follow suit. A study of Saudi Arabia on this matter would make interesting reading, I’m sure…

Our Finite World

Recently, I explained how high oil prices can bring on financial collapse for oil importers. In this post, I’ll discuss the flip side of the situation: how oil exporters reach financial collapse.

Unfortunately, we have many examples of countries that were oil exporters, but are dealing with collapse situations. Egypt, Syria, and Yemen all have had political disruptions since 2011. These may not be called financial collapse, but they all took place as the country’s oil exports decreased and as the price of imported food rose. Another example is the Former Soviet Union (FSU). It collapsed in 1991, after a period of low oil prices, in what looks very much like a financial collapse.

There are several dynamics at work in the financial collapse of oil exporters:

  1. Oil exporters are often dependent on oil export revenue to fund government programs.
  2. The need for government programs grows as population…

View original post 1,687 more words

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