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biochem
Rear Admiral
Posts: 1372
Joined: Thu Aug 19, 2010 8:06 pm
Location: USA
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Tenshinai wrote:Norway, Singapore, Netherlands, Scotland and other first world countries with a strong oil dependence in their economy: Similar to Texas
Norway has very little dependence on oil. Go check just how much cash they are squirreling away in their oil fund for a rainy day. Its current value is somewhere around 900 billion USD. And it´s the single largest shareholder in Europe. Essentially, because of how relatively little of the oil money they actually use, they could maintain their current budgets for decades just by passively taking money from that reserve. Norway has effectively allowed their oil business to create most of it´s economic benefits indirectly, through the extra jobs provided and the secondary economic effects generated, rather than the actual profits from selling the oil. Very simplified, they have reserve funding enough to pay TWO years worth of national GDP. Or pay their whole national budget for 5 years. They could give every citizen in Norway 200000$. And with Statoil being a publicly owned company(ie no need for shortterm demands of bankruptcy or profit when the business disappears "overnight"), even with oil disappearing as part of economy, if they´re smart(and they have been so far) they could crashmove as much as possible of this skill and experience over to other and new areas to mitigate impacts. Netherlands still is the main point of imports into western Europe, it would feel the disappearance of the oil economy but probably not be severely affected for long.
I think Norway still have considerable difficulties with this type of a change-over. The government itself isn't necessarily the problem, it's all of those employees, their salaries and the secondary effects. The problem is the suddenness. It will take them time to retrench and retrain, with lots of false starts (ideas for replacement industries that don't work out). These sorts of things are always trial and error. So I still think the transition period will be a challenge. But I think Norway is up to it and will pull out of the temporary recession with a strong economy in the end. The Saud family flees to Europe.
Why ever would they come here? They have little to no friends here. Those are in USA.
We don't like them either. Yemen, Oman, Brunei, Kazakhstan, Nigeria, Algeria, Lybia and most of the other oil dependent Islamic dictatorships: Similar to Saudi Arabia
Brunei and Kazakhstan would probably get over it without any major disturbances. And Nigeria would likely keep using the oil domestically, as it would likely be cheaper than reliably importing the new "wonderstuff", and actually chances are fair that the nation would actually have an outbreak of "sort of peace", because the biggest creator of trouble there now is oil, directly or indirectly. Algeria would probably not go very chaotic either.
Texas - economy depends a lot on oil but oil/gas extraction only accounts for about 12% of the economy, so the other 88% will keep it out of a depression, though it will be in recession in the short term. In the long term the boom in other economic areas enables recovery.
It´s much worse than that unfortunately. Texan economy that relies on secondary effects from the oil industry is massively larger than that. And since you only mention extraction, don´t forget refining. Texas is one of the places that would risk being as badly affected as places like Saudi Arabia. The Saudis have massive amount of central control that can mitigate the crash even if their basic economy has a much worse base in reality than Texas has. But face it, direct and indirect effects of the oil and gas industry in Texas is on a ridiculous scale, and i really don´t think you realise just how much of the "fat cats" that would disappear from the place within a year of your new "wonderstuff" taking over. Most likely, Texas would face a runoff of capital and people that would make the great depression look like a minor hiccup. The local and state governments just doesn´t have anything to say in the matter, they have near zero influence to do anything, and >90% of the people that have the cash to do anything at all to mitigate the consequences, are hardcore "profit first" capitalists, they just don´t have any interest in doing anything that doesn´t earn them more cash. And the minority that does, wont be enough when the profithunters leave. And while Texas isn´t completely without other assets, it has no easy economies to switch to, and noone to pay for such a switch. Remember how badly Texas was hit in the 80s just by falling oil prices, something that may be about to happen again BTW. A complete loss of ALL that economy would be severely felt. The only part of the Texas industry that would have any chance of really taking over as a major force in the economy is the high tech industry, and the problem with that is there´s near zero ability for the oil industry and service industry layoffs to migrate to it, and Texas higher education is one of its weak points, meaning that hiring locally will be just as difficult as before. Texan agriculture is big, sure, but it´s also already over the edge of sustainable, so increasing the amount of farming is just going to kill it off faster(lack of water is the big longterm problem and it´s only getting worse). There are some other specialty industries, like defense and healthcare, even moviemaking being a relatively big thing there, but again the same problem as with the computer industry, most oil and service workers that becomes instantly redundant can´t just transfer over. Essentially, it comes down to *OUCH!*. Even Saudi Arabia MIGHT get over it easier, simply because they don´t rely on private money or letting people do as they want. While good in expansive economies, it combines with the other effects and risks causing big bad nastiness on Texas.
Texas has been very focused on diversifying it's economy lately. It is a huge source of non-oil job growth. Better than most of the rest of the USA actually. They are aggressively recruiting companies to relocate to Texas to take advantage of the "positive business environment" which translates to: low wages, low taxes and minimal regulation (minimal regulation even by US standards). So there likely will be a lot of jobs to take the place of the lost oil jobs. The biggest impact will be that the "good" high paying oil jobs will be replaced by "bad" low pay low/no benefit jobs. Given the current jobless recovery we are in the middle of the Texas situation has triggered lots of discussions among the talking heads about whether bad jobs being created are better or worse than no jobs at all. Saudi is in trouble. Everything is government controlled but that government is the Saud family. It is not a government of the people by the people, it is much more personal than that. The Sauds have been successfully keeping a lid on a pressure cooker by a to date successful carrot/stick approach. The carrot is a combination of a welfare state and for things welfare doesn't cover personal charity / direct payment by members of the Saud family. It is a very medieval setup. The family takes care of their peasants, the peasants repay that care with loyalty to the overlord. On the stick side they have funded a very effective secret police type state. Both sides depend heavily on oil money. When that money vanishes the welfare state evaporates and dependent people suddenly become desperate people who have not developed the skills to fend for themselves. At the same time the security apparatus that has kept the dissidents in check is suddenly unpaid. The Sauds could spend the money they've squirreled away to maintain power but it will cost them dearly. I tend to believe this current generation of Sauds will choose instead to live the high life somewhere else. Russia: Putin gets even more aggressive militarily in an attempt to distract from the ongoing economic collapse
Hell no. The man definitely knows better than to spend money uselessly into a black hole of deficit. More likely he would restrict trade more to mitigate the impact on domestic industry, while trying to move the oil/gas industry into other areas. Russia has the advantage of size in more ways than one, one being that in many ways it´s effectively a very large economy partially removed from the rest of the world(money and people can´t just up and leave at the drop of a hat the way it would in Texas), which means a more isolationary standing combined with state interventions(already heavily involved in the oil industry) should be well able to stave off any collapse. First year actions would determine how badly it goes overall though.
Putin is an extraordinarily intelligent guy and he knows that one key way to bring a country together is to "Wag the Dog". That in part is what he is doing in the Ukraine. He cares about his power and the current situation, not what will happen after his death. So I don't think he'll have any problem leaving his successor with a deep debt problem if it allows him to remain firmly in power for his lifetime. Mexico: Enters a recession. The government changes hands and business as usual goes on.
Mexico could be the one place that literally goes to hell with the oil economy disappearing. It´s already on very shaky ground, severe corruption and massive organised criminality with none of the scruples of the original mafias, the place could blow up really bad.
Mexico isn't that dependent on oil revenue. The majority of it disappears into the corruption. Those individuals will be badly hurt, but because they've been stealing most of the money the impact on the rest of the Mexican economy won't be as severe as it should be for that level of oil production. I think they'll still have some negative impacts but nothing as severe as the oil dependent Islamic states. Venezuela: House of cards collapses and the country falls into civil war. The military takes over in a coup. Chavez's friends are executed and the country converts to a stereotypical South American military state.
No, continual civil war is more likely. Because the main reason the fat cats of the nation are trying to take over, and are getting anywhere with it, is because they´re rich and getting heavy support from USA. With a collapsed oil industry, USA would probably not be able to continue such support, and even more likely, wouldn´t even be interested in doing so, as the oil seems to be primary reason of interest. So, we suddenly have a rightwing junta taking over with parts of the military and the rich kids in support. And then they no longer have their big cash cows for support. While the poor people remains poor. And well armed. Could be a slaughter either direction, just as well as a decades long civil war. At best they(as in the less extreme part of all factions) MIGHT be able to come to some sort of agreement, but with the primary national income gone, getting things peaceful(rather than not "open warfare and massacres" would be hard.
Could be. I tend to lean toward a rightwing military junta because that is the traditional path countries in South America have taken when things go bad. But you could be right and there may be a decades long civil war instead. Chavez really wrecked the place. Elsewhere in the first world: Economies boom as the price of oil based products drastically declines. Pulling the first world out of the recession at last.
Definitely not that simple! The effects from the oil industry crash is going to create massive unemployment in even countries only involved on the fringes of oil industry, with most of those nations not able to counter the effects of that very much.
Perhaps I'm biased by being in the USA where transportation costs are a huge burden on the economy. The average US household spends about 5% of gross (pretax) income on fuel. Probably twice that percentage posttax. That money will now be available for them to spend on something else, causing a boom in the something else. Not to mention that the costs of other necessities such as food will be going down as well because a huge chuck of food cost is transportation related, freeing up even more household money. And then there is the impact on retail and other corporations all of which have a bottom line benefit from drastically reduced fuel costs. That money can now be spent on something else. Sure the executives will be getting big bonuses but companies will also increase expenditures in other areas such as capital equipment. Islamic terrorists throughout the world: Their funding stops, inhibiting their ability to carry out attacks. Then civil war in Saudi Arabia draws them to join in fighting over Mecca.
Elsewhere in the Islamic world: Economic collapse and civil war in the oil dependent Islamic dictatorships results in defunding of Madrassas and other attempts to drive the Islamic world toward Wahhabism. Home grown Wahhabists leave to join in the fighting in Saudi Arabia to the great relief of the majority non-Wahabists.
I´m afraid i´m not nearly that "optimistic". Economic depression and problems usually cause MORE extremeism, not less. There would for example be a definite risk of Saudi Arabia starting wars, official or unofficial for the sake of the leaders keeping control of the nation, as well as taking advantage of the chaos in nearby nations. And don´t forget USA has spent the last 30 years providing the Saudis with hordes of military equipment. Afghanistan, the average person has or can get an AK-47 within a few days... Saudi Arabia in a state of near unrest? The average person has access to or can aquire an Abrams tank within a week or two. Simplified of course, but that really is the scale of the problem. Not to forget their ability to build nucleararmed ICBMs of course. Smart move to sell them that stuff, yeah... 
It is impossible to underestimate the importance of Mecca to the world's Islamic population. And every Islamic group in the world will want to control it. That will be their number one priority. If the Sauds do lose control the fighting will be fierce. I tend to agree that there will be a lot more extremism but I think it will be local in the foreseeable future. The extremists will want to fight for control of #1 Mecca and #2 their own country first. They'll have the best chance of making an impact in the countries whose oil dependent governments have collapsed. After the fighting ends they may want to attack the west, but their resources will have been severely curtailed. A huge percentage of terrorism is funded by oil money, without that money they'll need an alternative funding source. Not to mention the fighting will have smashed most of their infrastructure. Most likely they'll turn into a nightmare locally but not a big threat elsewhere. They'll be able to do some things but lack of money will significantly inhibit them. North Korea: With the collapse of oil, most of their export market dries up as their customer's can't afford to buy anything. They fix their economy by the tradition of method of threatening South Korea, then agreeing to stop in exchange for western aid.
 Amusing but probably wrong. They´re actually one of the nations that would benefit the most from your proposed wonderstuff. Exactly where they would end up in the end is impossible to say, but their economy would probably get the biggest boost EVER. Lack of fuel has been the largest inhibiting factor for their economy ever since the Korean war. And if a replacement fuel could be had easily, they WOULD aquire the ability to produce it no matter what they had to do. It´s actually one of those rare instances of "this will solve all their problems". Or more correctly, has the potential to do so. Of course it´s more likely the leadership would just grow instantly more corrupt and siphon off much/most of the benefits, or even mess things up more, but the potential would be there.
[/quote] It won't solve all of their problems just some of them. Most of their electricity is from local coal and local hydroelectric. Fuel is needed for transportation and will allow them to diversify and expand to fuel based power generation. So it will help somewhat but they have a lot of other needs. For example they still need to buy food, machinery for their factories etc. So the loss of their customers will hurt. Perhaps the gain and loss will balance out. |
