If oil stays below $50 a barrel for five years, the Saudis’ cash reserve will be exhausted, and with it will also go the social stability that lavish spending for the Saudi elites brings.
Likewise on the chopping block would be the other Saudi export: super-conservative, misogynist, militant Islam, which is the jewel of the Saudi public diplomacy strategy.
Of course, it would take some pretty serious geopolitical fooforaw to keep oil below $50/barrel for five years. One possibility would be to subsidize dirty oil from the Canadian tar-sands with tax-dollars that would be better spent on $JUST_ABOUT_ANYTHING. Or the US/Canada/Scotland/Norway could drill the shit out of the North Sea; or the US and Mexico could try for a Deep Horizon 2 in the Gulf of Mexico. With enough subsidized crude, it’s possible that the West could bankrupt the Saudis and destabilize one of the worst regimes on the planet — at the expense of the atmosphere, sea levels and the world’s forest and marine ecosystems. Fewer well-funded assholes with bombs and/or schools — more tornadoes, hurricanes, floods, and fires.
But a better answer is more investment in renewables. Solar is a technology, not a fuel, so the more we invest in it, the cheaper it gets. There are lots of technical problems to solve in the renewables world, such as power-storage; and there are potentially larger institutional problems, like getting power companies to cut their own throats by investing in smart, peer-to-peer grids that sideline their role as Masterblaster to our Bartertown.
However, a handful of countries are well positioned to face the storm. Topping that list are Kuwait, Qatar and the United Arab Emirates. That’s partially because these countries don’t need sky-high oil prices to balance their budgets.
Kuwait’s break-even oil price is estimated by the IMF at just $49, or just a tad higher than current levels. The magic number is believed to be $56 in Qatar, the host of the 2022 World Cup, while the UAE needs $73 oil.
But these three countries have built up mountains of oil money that protect them during the leaner times. The IMF said the UAE has enough fiscal buffers to withstand $50 oil for nearly 30 years. Qatar and Kuwait can sustain cheap oil for almost 25 years.